The Peace Corps

Performance and Accountability Report

F i s ca l Y e ar 2 0 0 6
The FY 2006 Performance and Accountability Report is available on the agency’s website (www.peacecorps.gov) by following the link to Agency Jobs and Info/Policies/Documents. 

Feedback can be sent to the Peace Corps at its mailing address or via the agency’s website by following the link to Agency Jobs and Info/Contact Us/Questions and Comments.

The Peace Corps

Performance and Accountability Report

F i s ca l Y e ar 2 0 0 6

Paul D. Coverdell Peace Corps Headquarters | 1111 20th Street NW | Washington, DC 20526
The Peace Corps’ mission is to promote 

world peace and friendship. While 

much has changed in the world since 

the Peace Corps’ founding in 1961, its 

mission has not. The Peace Corps’

goals are as relevant today as they

were 45 years ago.
Contents

Message from the Director i

Management’s Discussion and Analysis 1

Core Issues 1

Mission Statement 3

Key Performance Goals and Results 6

Actions to Address Current Challenges and Future Challenges 9

Financial Summary 13

Management Assurances 15

President’s Management Agenda Summary 17

Performance Section 21

FY 2006 Performance Report 22

Financial Section and Notes 37

Letter from the Chief Financial Officer 38

Financial Statements and Notes 41

Inspector General’s Transmittal Letter 59

Independent Auditor’s Report on Financial Statements 63

Independent Auditor’s Report on Internal Control 65

Independent Auditor’s Report on Compliance with Laws and Regulations 81

Other Information 84

The Inspector General’s Statement on the 

Peace Corps’ Management Challenges 85

Agency Response to the Inspector General’s Statement

on the Peace Corps’ Management Challenges 88

Appendices 94

Appendix 1 95

Material Weakness and Non-Conformances

Appendix 2 96

Current Status of Prior Audit Recommendations

Directly Involving Financial Processes

Current Status of Prior Audit Recommendations 

Not Directly Involving Financial Processes
This page was intentionally left blank.
On behalf of the Americans serving as Peace Corps Volunteers around the world, I am pleased to present the Peace Corps’ Performance and Accountability Report (PAR) for fiscal year (FY) 2006. The PAR 

is a key report to the President, Congress, and the American people on the agency’s achievements, 

performance against pre-established objectives, and financial information regarding its operations 

during the past year.

The Peace Corps has been celebrating its 45th anniversary since March 1, 2006. The agency traces 

its roots and mission to the early 1960s, when then-Senator John F. Kennedy inspired Americans 

to serve their country in the cause of peace by living and working in developing countries. Over the 

past 45 years, Volunteers have continued their efforts to help those who want to build a better life for 

themselves, their children, and their communities. Since 1961, the Peace Corps has partnered with 139 

countries, and more than 187,000 Americans have served around the world carrying out the agency’s 

mission of promoting world peace and friendship.

Volunteers share their time and talents by serving as teachers, business advisors, information technology consultants, agriculture and environmental specialists, and health and HIV/AIDS educators carrying out the agency’s three goals:

1) to help the people of interested countries in meeting their need for trained men and women; 

2) to help promote a better understanding of Americans on the part of the peoples served; and

3) to help promote a better understanding of other peoples on the part of Americans.

As of the end of FY 2006, 7,749 Americans were serving as Peace Corps Volunteers at 67 posts in 73 

countries, encouraging sustainable development and cross-cultural understanding at the grassroots 

level.1 While fielding over 7,700 Volunteers is a significant achievement, the Peace Corps did not meet 

its target number of Volunteers in the field due to events in Bangladesh, Chad, and East Timor during 

FY 2006, which necessitated suspending operations in those countries. However, the agency broadened its international reach with the historic announcement of a new country entry into the Kingdom 

of Cambodia in FY 2006 that will bring Volunteers to that country for the first time.

The Peace Corps’ Crisis Corps program—which sends returned Peace Corps Volunteers on short-term 

assignments to assist with critical needs—experienced several historic firsts during FY 2006, including sending its 1,000th Volunteer into service. Throughout FY 2006, Crisis Corps deployed more than 

130 Volunteers to the Gulf Coast region to assist with relief efforts following Hurricanes Katrina and 

Rita. This deployment was funded by, coordinated with, and under the authority of the Federal Emergency Management Agency and marked the first time Volunteers had been deployed domestically. Additionally, working through an interagency agreement with the U.S. Agency for International Development, Crisis Corps sent 21 Americans to provide relief to those affected by the devastation caused by 

the tsunami in Southeast Asia. 

	 This 7,749 is an “on board” count of all Peace Corps Volunteers and trainees, Crisis Corps Volunteers, and United Nations Volunteers from all 

funding sources serving under the Peace Corps as of September 30, 2006. It includes 111 Volunteers funded by the President’s Emergency Plan for 

AIDS Relief, as well as 10 Volunteers funded through an interagency agreement with the U.S. Agency for International Development on tsunami 

relief efforts in Thailand. The “on board” count for posts includes posts in which the Peace Corps is active or suspended, but not closed.

THE DIRECTOR OF THE PEACE CORPS

WASHINGTON, D.C.
Recognizing the Peace Corps’ unique ability to play a positive role in the global fight against HIV/

AIDS, in November 2005, the agency created the Office of AIDS Relief within the Office of the Director. The Office of AIDS Relief provides agency-level policy guidance; overall leadership; and general 

supervision, direction, and coordination of Peace Corps’ HIV/AIDS activities, including the agency’s 

participation in the President’s Emergency Plan for AIDS Relief (PEPFAR). The Peace Corps continues 

to be a valuable participant in the PEPFAR program with 111 PEPFAR-funded Volunteers serving in 

nine of the 15 focus countries.2 Peace Corps Volunteers, by living and working at the grassroots level 

in communities and speaking the local language, are uniquely suited to share culturally appropriate 

messages in HIV/AIDS education and prevention. The agency has seen positive results from the increased efforts to incorporate HIV/AIDS messages into all Peace Corps projects and its participation 

in PEPFAR. In the 2006 Peace Corps Volunteer survey, 55 percent of Volunteers reported being engaged in HIV/AIDS activities as part of their Peace Corps work, which is a pronounced increase over 

the 2004 survey results, which reported 25 percent participation.

Volunteer safety and security remains the agency’s highest priority. The Peace Corps’ approach to 

safety and security acknowledges that Volunteer service has inherent risks, but emphasizes that the 

agency will do its part to ensure that safety and security systems and support are in place. Volunteers 

do their part by taking personal responsibility for their behavior at all times and by integrating successfully into their host communities. The Peace Corps ensures that safety and security issues are fully 

integrated in all aspects of Volunteer recruitment, training, and service. Though the Peace Corps has 

been tracking crimes against Volunteers for more than 15 years, FY 2006 marked the introduction of 

a new crime reporting process. An electronic Crime Incident Reporting Form (CIRF) was created to 

ensure that violent crimes and medical issues are reported immediately, confidentially, and to the appropriate support staff. The CIRF also clarifies crime definitions so future trends analyses can be as 

accurate as possible. Since under-reporting of crimes is a concern for the agency, the CIRF will help 

simplify the reporting process and is one step in encouraging more reporting of crimes. The data are 

collected, analyzed, and used to enhance existing policies and practices or to develop new policies as 

needed. The agency has committed considerable staff to the area of safety and security and will review 

its efforts to ensure that it is providing the best possible programmatic support to its overseas posts.

In FY 2006, the Peace Corps made significant strides in improving the process of performance reporting for the agency. In fall 2005, the agency began revising its 2003–2008 strategic plan to provide an 

interim adjustment for fiscal years 2006–2008. Improvements were made to better align the plan to the 

Peace Corps’ three goals and internal processes, including new and modified strategic objectives with 

outcome-oriented targets and indicators. The Peace Corps completed, and the Office of Management 

and Budget (OMB) approved, the revised version of the agency’s strategic plan, which was included in 

the fiscal year 2007 Congressional Budget Justification. 

Thus, FY 2006 marks the first year for the agency to report out on its current set of ambitious but achievable performance goals and indicators as outlined in the strategic plan. This fiscal year, the agency was 

on or above target for five of the eight performance goals and 26 of the 33 performance indicators. The 

Peace Corps’ FY 2006 performance results are based on reliable, actual data that are complete as of 

the production of the results at the close of the fiscal year. However, the data are limited by instances 

of unforeseen challenges with technology and data that flow in beyond the reporting dates. Overall, 

the Peace Corps has made great progress in documenting and streamlining its performance reporting 

process at the agency and can provide solid results on performance measures. 

	 PEPFAR has identified 15 focus countries. The Peace Corps has posts in nine of these focus countries—Botswana, Guyana, Kenya, Mozambique, 

Namibia, South Africa, Tanzania, Uganda, and Zambia. The other focus countries are Ethiopia, Haiti, Ivory Coast, Nigeria, Rwanda, and 

Vietnam.
The accompanying statements summarize the agency’s financial position; disclose the net cost of operations and changes in net position; and provide information on budgetary resources and financing 

for fiscal years ended September 30, 2006, and 2005. These statements reflect activity of appropriated 

funds, with footnote recognition for those trust fund and special fund receipt accounts over which the 

agency has fiduciary stewardship. These statements were prepared to comply with the Accountability 

of Tax Dollars Act of 2002 and OMB guidelines and were prepared using generally accepted accounting principles for federal entities. 3

The Peace Corps’ financial statements were prepared from its financial systems and processes using 

the most reliable and complete data available. The Peace Corps has made tremendous strides in the 

past year in improving financial management to include capitalizing on a fully integrated financial 

management system and reengineering key processes. There are, however, always portions of financial processes that warrant improvement or refinement. In this report the letter from the chief 

financial officer provides details of actions to be taken to enhance the Peace Corps’ future financial 

management.

The agency had total assets of $173 million as of September 30, 2006, and $176 million as of September 

30, 2005. Budgetary sources available for use by the agency totaled $344 million in FY 2006 and $338 

million in FY 2005, of which appropriated funds (net of rescission) totaled $319 million and $317 million, respectively. The agency has implemented an internal management controls program that, once 

the testing phase is completed, will fully comply with the Federal Managers’ Financial Integrity Act and 

its implementing directive, OMB Circular A-123, Management’s Responsibility for Internal Control. This 

program has resulted in the qualified statement of assurance provided later in this document. 

I am pleased to report out on the agency’s financial and performance results. I am proud of the Americans serving as Peace Corps Volunteers around the world. By living, working, and integrating into 

their local communities, Volunteers have a unique role in empowering people in countries across the 

globe to take charge of their own futures and to strengthen the bonds of friendship and understanding 

between Americans and the people of other cultures. The agency will continue its leadership, management, and stewardship of resources to enable more Americans to have the opportunity to carry out the 

Peace Corps’ noble mission.

Ronald A. Tschetter, Director

November 15, 2006

	 The statements should be read with the realization that they are a component of the overall statements of the U.S. government.
m a n a g e m e n t ’ s d i s c u s s i o n a n d a n a l y s i s
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Overview | Core Issues

The Peace Corps provides practical assistance to 

developing countries by sharing America’s most 

precious resource—its people. The close interaction between Peace Corps Volunteers and local communities has allowed the Peace Corps to 

establish a record of service that is admired and 

recognized around the world.

As of the end of fiscal year (FY) 2006, 7,749 Americans were serving as Volunteers at 67 posts in 73 

countries, encouraging sustainable development 

and cross-cultural understanding at the grassroots level.4 Volunteers work in the areas of agriculture, business, education, the environment, 

health and HIV/AIDS, and youth development 

and on cross-cutting themes such as information and communications technology. Currently, 

about 20 percent of Volunteers are serving in nations with predominantly Muslim populations. 

Since the agency’s inception 45 years ago, the 

Peace Corps has partnered with 139 countries, 

and more than 187,000 Volunteers have served 

around the world. 

In addition to transferring skills to host country nationals and promoting cross-cultural 

understanding between Americans and other 

peoples, Peace Corps service also provides 

America’s workforce with overseas experience. In fact, in September 2006, the Peace 

Corps was recognized by Business Week as one 

of the top 50 best places to launch a career. Returned Peace Corps Volunteers also contribute 

to America’s legacy of service by offering their 

time and skills to community volunteer programs around the country as well as through 

Peace Corps programs such as Crisis Corps, 

Fellows/USA, and Peace Corps Week.

The Peace Corps is providing valuable assistance in the global fight against the HIV/AIDS 

pandemic. Since Volunteers live and work at the 

grassroots level in communities and speak the 

local language, they are powerful builders of 

human capacity and conveyors of HIV/AIDS education and prevention messages. The agency 

established the Office of AIDS Relief within the 

Office of the Director to lead the Peace Corps’ 

HIV/AIDS efforts and to coordinate the agency’s participation in the President’s Emergency 

Plan for AIDS Relief (PEPFAR). With Volunteers working exclusively on HIV/AIDS in PEPFAR focus countries and Volunteers weaving 

HIV/AIDS prevention messages into their work 

throughout the world, the agency is an important partner in carrying out efforts to stem the 

tide of this pandemic.

The agency celebrated its 45th anniversary by 

looking back at its historic milestones, but also 

by looking forward. The year marked a fitting 

time for the Peace Corps to formalize its partnership with two prominent international voluntary 

service organizations. The Peace Corps signed 

memoranda of understanding with both the Japanese International Cooperation Agency (JICA) 

and the German Development Service (DED). 

Previous collaborations with these two organizations had been localized to individual posts 

and no formal system existed for participants 

to best tap into the potential benefits of a structured collaboration. One key area that these and 

other international voluntary service organizations are focusing on is capturing the impact of 

the Volunteer’s service on the host country. 

Similarly, in FY 2006, the Peace Corps embarked 

on a broader effort to develop increasingly sophisticated research methods for measuring 

outcomes. The strategic research and information team, composed of leaders within the organization with backgrounds in data use and 

4	 This 7,749 is an “on board” count of all Peace Corps Volunteers and trainees, Crisis Corps Volunteers, and United Nations Volunteers from all 

funding sources serving under the Peace Corps as of September 30, 2006. It includes 111 Volunteers funded by the President’s Emergency Plan for 

AIDS Relief, as well as 10 Volunteers funded through an interagency agreement with the U.S. Agency for International Development on tsunami 

relief efforts in Thailand. The “on board” count for posts includes posts in which the Peace Corps is active or suspended, but not closed.

The Peace Corps :: performance and accountability report :: fiscal year 2006

Management’s Discussion and Analysis
Management’s Discussion and Analysis

 The Peace Corps :: performance and accountability report :: fiscal year 2006

management, is actively developing a plan for 

greater outcome measurement as well as a new 

structure to increase the agency’s research, 

evaluation, and strategic planning functions. 

This challenge will continue to be a focus of the 

agency in the years ahead.

One of the agency’s greatest challenges is balancing the need to keep Volunteers as safe as 

possible while maintaining the integrity of 

the Volunteer experience. Safety and security 

messages and training are integrated into every stage of the Volunteer’s service. From application to close of service, Volunteers receive 

the best information available about safety 

risks and how they can minimize those risks. 

While Volunteer service is inherently risky 

and Volunteers must take much responsibility for their own safety, the Peace Corps has 

an extensive, well-established support system 

geared toward Volunteer safety and security. 

The agency has committed considerable staff 

and resources to the area of safety and security 

and will review its efforts to ensure that it is 

providing the best possible programmatic support to overseas posts.

In an effort focused on the efficiency and effectiveness of Peace Corps operations, the agency 

launched a program of internal management assessments of posts in FY 2006. The goal of the 

internal management assessment program is to 

partner with regional and posts’ senior leadership to strengthen and improve post management. Assessment teams have pursued meaningful solutions to improve posts’ operations and 

to enhance Volunteer service and programmatic 

impact. Seven post assessments were conducted 

this year leading to specific recommendations, 

some of which have agency-wide implications. 

The assessment teams will strategically choose 

more posts to visit in future fiscal years.

Overall, the Peace Corps’ mission and efforts 

around the globe are as important as ever. The 

agency will continue to strive to operate at an 

optimum level to ensure more Americans are 

given the opportunity to serve as Peace Corps 

Volunteers to carry out the agency’s mission of 

world peace and friendship.

Education Volunteer, South Africa: All Peace Corps Volunteers are encouraged to integrate some form of HIV/AIDS education or 

awareness into their primary assignments. 
The Peace Corps :: performance and accountability report :: fiscal year 2006 

Management’s Discussion and Analysis

Overview | Mission

The Peace Corps’ mission is to promote world 

peace and friendship. While much has changed 

in the world since the Peace Corps’ founding in 

1961, its mission has not. The Peace Corps’ three 

core goals are as relevant today as they were 45 

years ago: 

1) To help the people of interested countries 

in meeting their need for trained men and 

women; 

2) To help promote a better understanding of 

Americans on the part of the peoples served; 

and

3) To help promote a better understanding of 

other peoples on the part of Americans.

The Peace Corps aims to carry out its mission 

and goals by assisting interested countries 

with their development needs while providing 

an effective and satisfying Volunteer experience for a diverse group of Americans in a safe 

and secure environment, and by building an 

operational infrastructure that efficiently and 

effectively supports the Peace Corps Volunteer 

in the 21st century.

Since the program’s inception, more than 

187,000 Americans have served as Volunteers, 

and the agency has partnered with 139 countries 

throughout the world. These Volunteers foster 

positive relationships with host country nationals, dispel myths about Americans, and promote 

sustainable development. They also bring messages back to the American people about life 

overseas, the people the Volunteers have served, 

and the cultures they have experienced.

The women and men who serve as Volunteers 

reflect the rich diversity of the United States 

and represent some of the finest characteristics 

of the American people: a strong work ethic, a 

0

generosity of spirit, a commitment to service, 

and an approach to problems that is both optimistic and pragmatic. They are afforded no special privileges and often live in remote, isolated 

communities. They speak local languages and 

learn the cultures and customs of the people 

they serve. In this process, Volunteers share and 

represent the culture and values of the American people, and in doing so earn respect and 

admiration for the U.S. among people who may 

have never met an American. 

The Peace Corps publishes its current strategic plan in the Congressional Budget Justification (CBJ), which is submitted to Congress 

each year. The CBJ is available to the public on 

the agency’s website, www.peacecorps.gov. 5

The key strategic goals outlined in the agency’s 

strategic plan focus on: 

• Delivering a trained and diverse group 

of Volunteers to interested countries to 

transfer tangible skills and promote crosscultural understanding; 

• Ensuring Volunteers have a quality experience by providing relevant health, safety, 

and programmatic support;

• Increasing the exposure of Americans to 

other cultures by sharing Volunteer experiences through a variety of avenues; and

• Meeting the needs of applicants and Volunteers with efficient and effective support. 

The Peace Corps organizational structure supports the agency’s efforts to carry out its mission. Peace Corps Volunteers serve in posts 

throughout the world. Thus, the Peace Corps’ 

organizational structure at headquarters divides these posts into three regions that provide operational support to the overseas posts: 

5	 The FY 2007 Congressional Budget Justification can be accessed at the following URL: 

http://www.peacecorps.gov/policies/pdf/peacecorps_cbj_2007.pdf
Management’s Discussion and Analysis

 The Peace Corps :: performance and accountability report :: fiscal year 2006

the Europe, Mediterranean, and Asia region; 

the Inter-America and the Pacific region; and 

the Africa region. Offices such as Volunteer Recruitment and Selection, the Office of Safety 

and Security, Volunteer Support, and the Center for Field Assistance and Applied Research 

serve as functional and management structures 

to ensure Volunteers are recruited, screened, 

and supplied to posts and effectively supported with safety, programming, training, and 

other resources. The Office of Domestic Programs provides assistance to returned Peace 

Corps Volunteers and helps reach the American public in support of the agency’s third goal 

of promoting a better understanding of other 

cultures by sponsoring activities that reach 

into classrooms and communities throughout 

the United States. Offices such as the Office of 

the Chief Financial Officer, Office of the Chief 

Information Officer, and Management provide 

financial, information technology, and administrative support agency functions. The agency’s full organization chart is represented in 

the graphic on the following page.

Global development indicators suggest that 

nations face significant challenges in the areas 

of agriculture, education, business, information technology, health and HIV/AIDS, the environment, and youth development. The Peace 

Corps, in partnership with interested countries, provides skilled Americans who work 

to transfer their knowledge about these areas 

and to build greater understanding between 

cultures. Thus, the Peace Corps provides practical assistance to developing countries by 

sharing America’s most precious resource—its 

people. The Peace Corps combines development with people-to-people relationships that 

Volunteers forge with host country colleagues 

and communities. This serves as a crucial 

foundation for peace and friendship for years 

to come. Indeed, the core values of the Peace 

Corps since its establishment on March 1, 1961, 

remain relevant, vital, and strong.

Agriculture Volunteer, Tonga: Peace Corps Volunteers continue to carry out the 45 year old mission of the agency by transferring 

their skills and building cross-cultural understanding with the peoples served.
The Peace Corps :: performance and accountability report :: fiscal year 2006 

Management’s Discussion and Analysis

Executive

Secretariat

Deputy Chief of Staff/

Deputy Chief 

of Operations

Office of American 

Diversity/EEO

Office of the

General Counsel

Director

Deputy Director

Overseas Posts

Office of 

Safety and Security

Office of

Volunteer Recruitment

and Selection

Office of the Chief

Financial Officer

Office of 

Private Sector

Initiatives

Office of Planning,

Policy, and Analysis

Office of

Congressional

Relations

Office of 

Press Relations

Office of

AIDS Relief

Chief Compliance

Officer

Office of 

Volunteer Support

The Center for 

Field Assistance &

Applied Research

Office of the Chief

Information Officer

Crisis Corps

Office of 

Communications

Overseas Posts

Inter-America and 

the Pacific Region Africa Region

Overseas Posts

Europe,

Mediterranean, and 

Asia Region

Office of

Inspector General

Chief of Staff/

Operations

Office of Acquisitions

and Contract

Management

Office of 

Management

Note: In their functions as Chief Financial Officer and Chief Information Officer, 

the incumbents report directly to the Director. The Office of Acquisitions and 

Contract Management reports to the Chief of Staff with a dotted line report to 

the Director.

Graphic | Peace Corps Organization
Management’s Discussion and Analysis

 The Peace Corps :: performance and accountability report :: fiscal year 2006

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Key Performance Goals and Results

Performance Goals and Results Summary

In fall 2005, the agency embarked on an effort 

to revise the 2003–2008 strategic plan to provide an interim adjustment for fiscal years (FY) 

2006–2008. Improvements were made to better 

align the plan to the Peace Corps’ three goals 

and internal processes, including new and 

modified strategic objectives with outcomeoriented targets and indicators. This effort was 

undertaken following the FY 2005 review of the 

agency via the Program Assessment Rating Tool 

(PART). While the Peace Corps received an “effective” rating, the PART review process also 

included recommendations for improvement, 

which led to the modifications. The Peace Corps 

completed, and OMB approved, a revised strategic plan, which was included in the FY 2007 

Congressional Budget Justification.

Thus, FY 2006 is the first year for the agency 

to report out on its current set of ambitious 

but achievable performance goals and indicator targets outlined in the strategic plan. The 

Peace Corps utilizes performance goals and 

measures that focus on providing skilled Volunteers to meet host country needs, supporting the health and safety of the Volunteer, and 

ensuring that Volunteers reflect the face of 

America to host countries. The measures also 

look at the efficiency and effectiveness of programs to recruit, train, and support Volunteers 

as they carry out their work, as well as the exposure of Americans to other cultures through 

Peace Corps programs. In FY 2006, the agency 

was on or above target for five of the eight performance goals and 26 of the 33 performance 

indicators. These measures are addressed at 

length in the Performance section of the PAR.

As of the end of FY 2006, 7,749 Americans were 

serving in 73 countries through 67 posts as Peace 

Corps Volunteers encouraging sustainable development and cross-cultural understanding at 

the grassroots level. While fielding more than 

7,700 Volunteers is a significant achievement, 

the Peace Corps did not meet its target number 

of Volunteers in the field due to the suspension of 

operations in Bangladesh, Chad, and East Timor 

during FY 2006. However, the agency broadened 

its international reach by entering into the Kingdom of Cambodia in FY 2006 for the first time in 

the agency’s history. The agency also announced 

plans to reenter Ethiopia in FY 2007 with Volunteers who will focus on health and HIV/AIDS. 

Additionally, the agency may enter one other new 

country during FY 2007. With requested funding 

levels and the infusion of Volunteers into existing and new countries, the agency is well-placed 

to meet its FY 2007 targets.

The agency was slightly below target on the 

number of Peace Corps applicants representing 

diverse ethnicities and people over 50. While 

the agency has set ambitious goals in these categories, more efforts are planned to help meet 

the targets. This includes pilot recruitment efforts by regional recruitment offices around the 

country. These offices will also target specified 

associations and gatherings to help boost applications from Americans over 50 and from 

Americans of diverse ethnicities. Additionally, 

a long-time informal partnership between the 

Peace Corps and the Hispanic Association of 

Colleges and Universities was formalized in FY 

2006 with an agreement that strengthens the 

cooperative relationship.

Media outreach efforts are strong, and the 

agency exceeded its goals in FY 2006 for press 

coverage of diverse Volunteers or in outlets 

covering diverse audiences, as well as public service announcement (PSA) placements 

in minority- and diversity-geared media. To 

reach more diverse audiences, the agency released a new radio PSA that appeals to radio 

stations with an urban format (reaching a wider African-American audience) and Spanish 

language versions of the PSA for both television and radio.
The Peace Corps :: performance and accountability report :: fiscal year 2006 

Management’s Discussion and Analysis

The Peace Corps has various survey instruments to capture Volunteer feedback on key 

indicators of the agency’s efficiency and effectiveness in delivering different services. The 

agency received high percentages of positive 

responses from Volunteers, which allowed the 

agency to meet or surpass various performance 

goals. Messages on health, safety, and cultural 

awareness are woven throughout the agency’s 

recruitment and training materials. The Peace 

Corps has management, programming, training, safety, administrative, and medical staff 

strategically positioned to care for the needs of 

Peace Corps Volunteers. Staff continually trains, 

supports, and interacts with Volunteers to build 

their technical, language, and cross-cultural 

skills and to ensure they can carry out their mission in a safe and healthy manner. 

The Peace Corps surveys Volunteers at different stages of their service enabling the agency 

to receive continual feedback. As the agency 

strives for constant improvement, the survey 

results can benefit currently serving and future 

Volunteers. The biennial Peace Corps Volunteer 

survey provides an important snapshot of Volunteer satisfaction during the same period of 

time worldwide. The close-of-service survey, 

implemented throughout FY 2006, allows Volunteers to provide feedback as they complete 

their time in the field. In FY 2005, the Peace 

Corps also put a revised feedback mechanism 

in place for Volunteers who choose to terminate 

their service early, which has yielded important 

data for analysis. By gathering feedback from 

both Volunteers and staff via a resignation reasons form, the agency receives valuable insight 

about why some Volunteers choose to conclude 

their service early.

There are numerous steps in the application 

process to become a Peace Corps Volunteer. This 

enables the agency to recruit and thoroughly 

screen applicants for skills and medical and 

suitability issues prior to approving and inviting them to serve as Volunteers. This application 

process was divided into the various stages for 

which the Peace Corps has processing responsibilities to best analyze its efficiencies. The 

agency is pleased to have exceeded the FY 2006 

goal of response time to applicants. Through 

its enterprise architecture (EA) team and other 

committees, the agency remains committed to 

streamlining the processes that enable Americans to obtain information, apply, join, and 

complete service as Peace Corps Volunteers.

Despite activities and events associated with 

the agency’s 45thanniversary and Peace Corps 

Week, the agency narrowly missed its targeted 

number of interactions of returned Peace Corps 

Volunteers (RPCVs) with the American public, 

in part due to the challenge of formally capturing the breadth of participation. RPCV activities help carry the message of understanding 

of other cultures as they share their stories and 

experiences with schools, community groups 

and elsewhere across the country. While 45th 

anniversary events took place throughout the 

world, the events across the United States, in 

Performance goals (8) and brief description Under On Over

1.1 Volunteers serving

1.2 Transfer skills and understanding

1.3 Represent American diversity

2.1 Quality healthcare

2.2 Volunteer safety

3.1 Interactions with Americans to build cross-cultural understanding

4.1 Efficient application process

4.2 Maintain resignation rate

Total Performance Goals 3 1 4
Management’s Discussion and Analysis

 The Peace Corps :: performance and accountability report :: fiscal year 2006

particular, have produced significant positive 

exposure for the agency. During this anniversary year, the agency released a special video 

and A Life Inspired: Tales of Peace Corps Service, 

a compilation of short stories from Volunteers 

all over the world. In addition to a special recognition ceremony on Capitol Hill and the numerous dignitaries who visited Peace Corps 

headquarters throughout the year, the firstever John F. Kennedy Service Awards were 

presented to six recipients who demonstrated 

exemplary service and leadership in fulfilling 

the agency’s mission.

Performance Reporting Procedures

In FY 2006, the Peace Corps made significant 

strides to improve its performance reporting process. Throughout FY 2006, the agency 

worked to enhance its internal controls and 

documentation of processes surrounding strategic performance reporting to address the 

auditor’s finding in the FY 2005 Performance 

and Accountability Report of insufficient controls. Enhanced documentation now allows for 

greater continuity and reliability in reporting 

and helps mitigate the effect staff changes have 

on consistent performance reporting. The new 

reporting process was tested utilizing the offices’ documented reporting processes during 

the mid-year budget review process.

Addressing mid-year performance results during this time allowed the agency to take another 

positive step forward in aligning performance 

and budgeting. This formal process includes a 

presentation to the Director in which offices account for their budget and performance results. 

An integrated mid-year review allows for funding and human resources to be reallocated to 

correct a course if there are challenges in meeting performance goals or to validate positive 

actions taken to meet performance targets.

The Peace Corps’ FY 2006 performance results 

are based on reliable, actual data that are complete as of the production of the results at the 

close of the fiscal year. However, the data are 

limited by instances of unforeseen challenges 

with technology and data that flow in beyond 

the reporting dates. Overall, the Peace Corps 

has made great progress in documenting and 

streamlining its performance reporting process 

at the agency and can provide solid results on 

performance measures.

Environment Volunteer, Morocco 

Peace Corps staff continually train, support, and interact 

with Volunteers to build their technical, language, and 

cross-cultural skills and to ensure they can carry out their 

mission in a safe and healthy manner.
The Peace Corps :: performance and accountability report :: fiscal year 2006 

Management’s Discussion and Analysis

0

Actions to Address Current Challenges and Future Challenges

Actions to Address Current Challenges

Programming and Training

A key component of placing Volunteers overseas 

is to ensure that they have a well-designed job 

and sufficient training to carry out their duties. 

Thus, agency efforts to enhance programming 

and training, through solid project plans and 

well-trained Volunteers and staff, help produce 

a positive Volunteer experience. 

The agency increased the number of field and 

headquarters staff overseeing programming 

and training in fiscal year (FY) 2006. The agency 

funded eight new programming and training officers worldwide and increased funding for staff 

exchanges, which allowed programming and 

training staff in the field to share best practices. 

Additionally, the Peace Corps sent experts as 

part of internal management assessment teams 

to seven posts to review operations to enhance 

Volunteer service and programmatic impact.

In FY 2006, the Center for Field Assistance and 

Applied Research (the Center) provided programming support to posts to build their capacity to design and manage successful projects to make Volunteer service more effective 

and satisfying. The Center provided in-depth 

constructive feedback on 37 project plans and 

reviewed and provided feedback on each of the 

224 annual project status reports. 

In FY 2006, the Center implemented training 

systems to support overseas staff and Volunteers. These trainings included two overseas 

staff training sessions—extended professional 

development courses—attended by 96 overseas 

staff. Attendees participated in programming 

and training-related sessions designed to build 

capacity at posts to better meet host country development needs. The trainings included special sessions for all training managers in which 

the Center rolled out a systematic approach to 

training design and evaluation. The Center also 

conducted field-based workshops for training 

managers in the field who were unable to attend these events. These workshops reached 

all training managers in the Africa and InterAmerica and Pacific regions, and included follow-up support to the training managers at 10 

of 18 posts in the Europe, Mediterranean, and 

Asia region. Furthermore, the three Peace Corps 

regions held various sub-regional staff development workshops for programming and training staff, which helped staff share best practices 

and review topics such as effective monitoring 

and reporting systems for projects. 

The Peace Corps’ newly established Office of 

AIDS Relief provided direct field support for 

HIV/AIDS projects to five posts. Posts received 

additional feedback and support for their HIV/

AIDS programming through the planning and 

budgeting process. Sixteen posts received assistance with their HIV/AIDS programming 

strategies and plans for their involvement with 

President’s Emergency Plan for AIDS Relief 

(PEPFAR).

When Peace Corps staff are well-trained and 

have highly honed skills, they provide better 

programming support and deliver better training to Volunteers. Volunteers receive training 

throughout their Peace Corps service, beginning with a two-day staging in the U.S. before 

they leave for post. This is followed by a twoto three-month intense pre-service training, 

in-service or mid-service trainings and other 

training events throughout their service. Volunteers learn important competencies related 

to health, safety, cross-cultural, language, and 

technical skills. Through annual training status reviews and information gleaned from the 

Volunteer survey, the Peace Corps continues to 

review its training, enabling it to deliver topquality skills training to Volunteers in the field. 
Management’s Discussion and Analysis

10 The Peace Corps :: performance and accountability report :: fiscal year 2006

Leadership development

To provide a source of well-prepared managers 

and leaders, the agency created the Peace Corps 

Leadership Development Academy (LDA). 

Launched in fall 2005, this 12-month program 

provides employees with the opportunity to develop the leadership skills necessary to manage 

other employees, think critically, and develop 

strategic performance metrics. LDA creates an 

environment of self-discovery and learning and 

provides opportunities for participants to apply 

these learned skills to improve the future of the 

Peace Corps. The program created opportunities for participants to learn critical leadership 

competencies including teamwork, problem 

solving, decisiveness, resource management, 

innovation, and creativity.

An action research project allows these developing leaders to critically assess key issues and 

recommend important changes that may shape 

the future of the agency. Using shadowing assignments with senior staff along with ongoing 

professional development opportunities, the 

participants were exposed to critical issues facing the Peace Corps.

LDA also features an outside mentoring program that promotes retaining potential leaders 

through personal developmental guidance and 

training. Mentoring helped participants build 

learning partnerships with staff at other federal 

agencies and increase their knowledge of the 

background and importance of federal careers. 

This tie-in with other agencies addresses the 

President’s Management Agenda directive to 

actively identify and develop potential leaders 

for the federal government to be competitive in 

the 21st century. Not only does LDA expand the 

skills of the participants so they are poised to 

assume positions of greater leadership for the 

Peace Corps at headquarters and in the field, 

but it prepares them for leadership positions at 

other federal agencies later in their careers.

Succession Planning

In FY 2006, the agency initiated a program of internal management assessments of Peace Corps 

posts. The goal of the internal management assessment program is to partner with regional 

and post senior leadership to strengthen and 

improve post management. Assessment teams 

have pursued meaningful solutions to improve 

the efficiency and effectiveness of post operations and to enhance Volunteer service and 

programmatic impact. These assessments are 

collaborative, timely for posts and the regions, 

relevant to senior staff at selected posts and in 

the region, build consensus, and are responsive 

to post and regional needs.

Seven post assessments were conducted this 

year. Assessment teams visited Albania, Bolivia, Dominican Republic, the Federated States 

of Micronesia and Palau, Jordan, Mozambique, 

and Tanzania.

The assessments addressed issues such as:

• Taking full advantage of technology advances to streamline core business processes; 

• Developing strategies to strengthen management and leadership; 

• Planning strategically for country director 

transitions; 

• Evaluating regional offices in geographically challenging posts; and

• Recruiting strategically.

Additionally, the Peace Corps began the practice of bringing outgoing country directors back 

to headquarters for an exit interview to ensure 

that the agency is apprised of post-specific issues that will need to be addressed by the incoming country director. As the key leader and 
The Peace Corps :: performance and accountability report :: fiscal year 2006 11

Management’s Discussion and Analysis

manager at post, good succession planning for 

country directors can have a lasting impact on 

a post. The assessment team has made further 

recommendations regarding handover reports 

for various staff to enable a smooth and information-filled transition for country director 

successors.

Furthermore, the Peace Corps finalized a continuity of operations (COOP) plan in case the 

agency has to operate in an extreme emergency 

situation. Its Office of Safety and Security also 

completed a COOP annex for pandemic influenza and developed a fully functional alternate 

relocation site using existing Peace Corps facilities. Both the COOP plan and the relocation 

site were successfully tested in 2006 during 

the Peace Corps’ participation in the biennial 

government-wide Forward Challenge COOP 

exercise. The Peace Corps’ COOP plan not only 

meets federal requirements, but has prepared 

the agency to continue to safeguard the safety 

and security of the Peace Corps Volunteers in 

the event of a COOP emergency. 

Development and Retention

of Institutional Knowledge

The agency developed and began institutionalizing a system to ensure accurate and consistent performance reporting. Throughout FY 

2006, the Peace Corps enhanced its internal 

controls and processes documentation surrounding strategic performance reporting in 

response to the auditor’s finding in the FY 2005 

PAR of insufficient controls. The enhanced 

documentation allows for greater continuity 

and reliability in reporting and helps mitigate 

the effects of staff changes on consistent performance reporting. The documentation process was a positive way to develop and retain 

institutional knowledge.

Furthermore, enhancements to the agency’s 

information technology (IT) infrastructure are 

creating systems and information to help develop and retain institutional knowledge. For 

instance, in the current fiscal year, the Peace 

Corps has released a new version of the Volunteer information database application (VIDA), 

which allows posts to manage their Volunteers 

using a standard system, process, and reports. 

This version of VIDA includes a new “whereabouts” report for traveling Volunteers and enhancements to improve emergency action plan 

(EAP) support and system usability for posts. 

The new VIDA version allows for the development and tracking of programmatic data at post 

in a supportable and manageable manner. This 

type of information was previously maintained 

in files and the memories of individuals at post. 

Once the individual departed post, so did his or 

her knowledge as well as the familiarity with the 

paper files. The paper format was not useful as 

there was no consistent format or process for 

capturing the data. Now all posts use the same 

tool, which provides consistency across posts 

and allows critical data to be available to future 

generations of staff.

Future Challenges

While the Peace Corps is on strong footing, 

there are always challenges to carrying out the 

agency’s mission in the most efficient and effective manner worldwide. In looking ahead, 

the agency must address the following areas of 

challenge:

•	 Volunteer delivery system,

•	 Strategic research, evaluation, and planning functions, and

•	 Financial processes to ensure the agency 

meets the goal of receiving an unqualified 

opinion on its financial statements by FY 

2009.
Management’s Discussion and Analysis

12 The Peace Corps :: performance and accountability report :: fiscal year 2006

The Peace Corps’ mission is as vital now as ever, 

and the agency will continue to undertake efforts to meet future challenges that will ensure 

the agency operates at an optimum level to support its Volunteers as they carry out their work 

around the world.

Education Volunteer, Mongolia: Peace Corps Volunteers represent the diverse face of America, promoting a better understanding 

of Americans on the part of the peoples served. 
The Peace Corps :: performance and accountability report :: fiscal year 2006 13

Management’s Discussion and Analysis

Financial Summary

Overview

Fiscal year (FY) 2006 was a time of substantial improvement and maturation for the 

Peace Corps’ financial systems, organization, 

and processes. The Office of the Chief Financial Officer (OCFO) completed its reorganization and continues to document its processes 

and strengthen the internal controls for each 

process. A reengineered Integrated Planning 

and Budget System (IPBS) facilitated timely financial management decisions. Most financial 

statements are now produced directly from the 

financial system, Odyssey, whereas an offline 

process had been used in prior years. Accounting for capital assets significantly improved 

and resulted in identifying (and recording) 

existing assets and adjusting the value of numerous previously recorded assets.

Analysis of the Peace Corps’ 

Financial Statements

The Peace Corps’ financial statements were 

prepared from its financial systems and processes using the most reliable, and complete 

data available. The Peace Corps’ financial systems were designed to conform to governmentwide standards. The Peace Corps has made tremendous strides in the past year in improving 

financial management to include capitalizing 

on a fully integrated financial management system and reengineering key processes. However, 

there are always portions of financial processes 

that warrant improvement or refinement. The 

letter from the chief financial officer provides 

details of enhancing Peace Corps’ future financial management.

The agency had total assets of $173 million as of 

September 30, 2006, and $176 million as of September 30, 2005. The agency made significant 

improvements in its accounting for capital assets during this past year. These improvements 

include refining the methodology for costing 

internally developed software, identifying and 

capitalizing previously unrecorded assets, giving recognition to estimated salvage values for 

the agency’s vehicle fleet, and increasing the 

capitalization threshold for general property. 

Budgetary resources available for use by the 

agency totaled $344 million in FY 2006 and $338 

million in FY 2005, of which appropriated funds 

(net of rescission) totaled $319 million and $317 

million, respectively. 

The agency has developed and implemented 

an agency-wide internal control program. It is 

spearheaded by a senior assessment team that 

meets at least quarterly, ensures self-assessments, advises corrective action plans when 

warranted, and monitors the progress of the 

corrective actions. 

Improper Payments Information Act (IPIA)

The Peace Corps was not identified under Section 57, “Programs for which Erroneous Payment Information is Requested,” in OMB Circular A-11. No specific improper payments were 

identified internally during this fiscal year or by 

the independent auditors that would reach the 

defined IPIA threshold of 2.5 percent and $10 

million. The Peace Corps does recognize the inherent risk associated with improper payments 

and performed a risk assessment during this 

fiscal year in the global accounts payable area. 

All payments are reviewed by a minimum of 

three levels—the approver, the verifier, and the 

certifying officer—prior to payment/processing. In FY 2007, the agency expects to perform 

statistical sampling to further validate the improper payment rate.

0
Management’s Discussion and Analysis

14 The Peace Corps :: performance and accountability report :: fiscal year 2006

Limitations of the Principal

Financial Statements

The principal financial statements have been 

prepared to report the agency’s financial position; disclose the net cost of operations and 

changes in net position; and provide information on budgetary resources and financing for 

fiscal years ended September 30, 2006, and 

2005 pursuant to the requirements of 31 U.S.C. 

3515(b). While these statements have been prepared from the agency’s records in accordance 

with generally accepted accounting principles 

for federal entities and the formats prescribed 

by OMB, the statements are in addition to the 

financial reports used to monitor and control 

budgetary resources which are prepared from 

the same records. 

The statements should be read with the realization that they are for a component of the U.S. 

government, a sovereign entity.

Business Volunteer, Tonga: While Peace Corps Volunteers assist host countries in meeting their own needs for information 

technology (IT) training, the agency is investing in appropriate IT infrastructure to ensure better management, reporting, 

security, and efficiency of operations. 
The Peace Corps :: performance and accountability report :: fiscal year 2006 15

Management’s Discussion and Analysis

Federal Managers’ Financial Integrity Act 

Statement of Qualified Assurance

The Peace Corps assessed the effectiveness of 

the organization’s internal controls to support 

effective and efficient programmatic operations, 

reliable financial reporting and compliance with 

applicable law and regulations in accordance 

with the Federal Managers’ Financial Integrity 

Act (FMFIA), Section 2. Based on this assessment, the Peace Corps is able to provide a qualified statement of assurance for FY 2006 that 

the internal controls are adequate and effective 

and meet the objectives with the exception of 

one material weakness. The material weakness 

is the lack of adequate controls over capital assets (Property, Plant, and Equipment (PP&E)). 

During the fiscal year 2006 financial statement 

audit, prior year material weaknesses were reassessed and modified to reflect the current 

control environment. These modified prior year 

material weaknesses are described in the Independent Auditor’s Report on Internal Control.

The Peace Corps conducted its assessment of 

whether the financial management systems 

conform to government-wide financial systems requirements in accordance with FMFIA, 

Section 4. Based on this assessment, the Peace 

Corps is able to provide a qualified statement of 

assurance for FY 2006 that the agency’s financial management systems conform to government-wide financial systems requirements in 

accordance with FMFIA, with the exception of 

two non-conformances. Specifically, the Peace 

Corps’ financial management system lacks a 

contingency plan and has not yet obtained accreditation and certification. 

Internal Control

In FY 2006, the agency implemented an internal 

control program that involves all senior managers guided by a senior assessment team (SAT). 

The SAT is led by the chief financial officer and 

includes other members of top agency management. Each office throughout the agency conducted risk assessments for all business areas 

and prepared and monitored corrective action 

plans for those areas designated as high risk, 

whether from self assessment or findings from 

the inspector general or external auditors. The 

final aspect of the agency’s program, development and utilization of testing plans, will be fully operational next year for all high-risk areas. 

Peace Corps managers signed individual assurance statements for FY 2006 attesting either to 

the adequacy of the internal controls or that 

material weaknesses existed in their area. Assurances were based on the managers’ personal 

knowledge of day-to-day operations, existing 

controls, and other related reviews and evaluations. Identified weaknesses were considered to 

be manageable within the control of the agency 

except as indicated otherwise. 

The Peace Corps has an enterprise architecture (EA) program within the Office of the 

CIO to modernize the systems and infrastructure to support the agency’s mission in the 

21st century. The EA program establishes the 

analysis and governance framework support 

to implement the Clinger-Cohen Act of 1996; 

OMB Circular A-11, Preparation, Submission, 

and Execution of the Budget; OMB Circular A130, Management of Federal Information Resources; the Federal Information Security Act; 

and various other legislative and regulatory 

requirements. In FY 2006, the EA program delivered numerous accomplishments including 

completing a consolidated enterprise systems 

inventory and creating an end-to-end view of 

the Volunteer delivery system (VDS), the main 

business line of the agency. Through its EA 

program, the Peace Corps is pursuing crossprogram and enterprise-wide initiatives strategically and methodically to better meet its 

mission and goals.

0

Management Assurances
Management’s Discussion and Analysis

16 The Peace Corps :: performance and accountability report :: fiscal year 2006

The Peace Corps continued to monitor its compliance with congressional mandates, regulations, and law, as well as its own policies. For 

both programmatic review and compliance with 

laws and regulations, the Office of Inspector 

General (OIG) conducts program evaluations, 

audits, and investigations. They also recommend program improvements, improved levels 

of economy and efficiency, and means to comply 

with Peace Corps’ policies. During FY 2006, the 

OIG conducted 14 program evaluations and 15 

audits at headquarters and in 21 countries. The 

agency continues to utilize a system of compliance with OIG report recommendations that 

includes follow-up to verify corrective actions 

have been taken. The agency also constantly 

updates its policy manual, and its policy review 

board assists with policy review, revision, and 

formulation.

Summary of Material Weaknesses 

and Non-Conformances

One material weakness and two non-conformances were identified within the Peace Corps 

for the fiscal year ending September 30, 2006. 

The material weakness relates to internal control 

and financial reporting, adequate controls over 

capital assets (PP&E), and is further described 

in Appendix 1. Tremendous strides were made 

in gaining control over PP&E in accordance 

with the corrective action plan during FY 2006. 

The agency anticipates completing the remaining PP&E efforts by March 2007. The other two 

non-conformances—completeness of a disaster 

recovery strategy and enterprise-wide financial 

system accreditation and certification—did not 

conform to the objectives of FMFIA for financial 

management systems and are described further 

in Appendix 1. Although much agency effort was 

expended toward these two areas of non-conformance, complete financial system certification and accreditation and the contingency plan 

are not anticipated until March 2007. During 

the fiscal year 2006 financial statement audit, 

prior year material weaknesses were reassessed 

and modified to reflect the current control environment. These modified prior year material 

weaknesses are described in the Independent 

Auditor’s Report on Internal Control.

Summary

The Peace Corps has made great progress in fiscal year 2006 and is pleased to provide a qualified statement of assurance, with the exception 

of one material weakness and two non-conformances, that the internal controls and financial management systems meet the objectives 

of FMFIA. 

Ronald A. Tschetter

Director

November 15, 2006

George A. Schutter III, CPA, CPCM

Chief Financial Officer

November 15, 2006
The Peace Corps :: performance and accountability report :: fiscal year 2006 17

Management’s Discussion and Analysis

President’s Management Agenda Summary

The Peace Corps has considered its strategic 

and performance goals, indicators, and targets 

within the context of the President’s Management Agenda (PMA) and its management initiatives. The Peace Corps can be held accountable 

for significantly, quantifiably, and annually improving the way the agency works. Systems are 

in place to permit candid discussions regarding 

where the agency is successful, where it falls 

short, and what is being done to improve performance. The Peace Corps is providing higher 

levels of service—levels now more comparable 

to the private sector—and properly accounting 

for where and how it spends taxpayers’ money. 

Strategic Management of Human Capital 

Work at the Peace Corps is carried out by staff 

working under a term-limited hiring authority, 

which has been in place since 1965. Most staff 

is limited to five years of regular employment, 

with certain exceptions that allow staff to exceed the five year limit and return to the agency 

for another term after a hiatus. The Peace Corps 

has continued to improve its human resource 

management (HRM) working within federal 

procedures and its unique term-limited appointments. The launch of the Peace Corps’ 

Leadership Development Academy, a 12-month 

program to ensure that potential future leaders will have the necessary skills to lead Peace 

Corps, should help build the skills of individuals 

for positions of greater leadership during their 

term appointment or upon return to the agency 

later in their careers.

The most sweeping HRM enhancement has been 

implementing, as a pilot program, an automated 

human capital management system based on enterprise architecture. The human capital management system has reduced hiring time frames 

in many cases, changed the span of control 

among offices, and increased staff who provide 

service to citizens, both on a full-time equivalent 

(FTE) level and on a volunteer level. 

The Human Resources Office is automating 

signifi­cant portions of the HRM system. The Office of Overseas Executive Selection and Support 

(OESS) was the first Peace Corps office to pilot 

the automated system. OESS currently takes applications for the agency’s key country director 

positions through both the automated system 

and an alternative electronic application. More 

than half of the applications in fiscal year (FY) 

2005–2006 came via the automated system. 

Planned possible actions for the next fiscal 

year include the Personnel Action Request/National Finance Center front-end system interface integration, automated SF-52 processing 

of Personnel Action Requests processing, the 

development of a management escalation plan 

regarding shared management information that 

simultaneously informs the vendor of outstanding issues, more training, focused marketing, 

and surveys.

Competitive Sourcing 

The agency has a full-time staff of approximately 1,000 employees located at Peace Corps 

headquarters, regional recruiting offices, and 

in the over 70 countries in which Volunteers 

serve. The Peace Corps uses approximately

2,000 contractor staff, both domestically and 

overseas; more than 90 percent of its overseas 

staff serves under personal service contracts. 

Over the years, the Peace Corps has also outsourced many of its functions to private firms 

and other government agencies. Through various outsourcing initiatives, the Peace Corps has 

achieved a 2:1 ratio of outsourced positions to 

every Peace Corps employee. These outsourcing 

initiatives have been driven by business case 

decisions and include information technology 

(IT)-managed services, mail services, medical 

services, medical records support, finance and 

accounting support, and Volunteer training and 

support. 

0
Management’s Discussion and Analysis

18 The Peace Corps :: performance and accountability report :: fiscal year 2006

In July 2006, the Peace Corps established a strategic sourcing council as the governing body for 

improvements in the acquisition process and 

competitive sourcing efforts. The council reviews, evaluates, and approves acquisition-related improvements and competitive sourcing 

initiatives that improve operational efficiency, 

improve services, or reduce cost. There were no 

competitive sourcing efforts implemented in FY 

2006, nor are there any planned for FY 2007. As 

the council gains momentum, however, competitive sourcing ideas and initiatives are expected to surface. 

Improved Financial Performance

This past year was one of substantial maturation 

for financial systems, for the organization of 

the Office of the Chief Financial Officer (OCFO), 

and for key agency-wide financial processes, 

including the internal control program and the 

Integrated Planning and Budget System (IPBS). 

This year, the OCFO made extensive progress by 

executing strategically minded plans built with 

tactical detail in financial management organizational structure, technology, documentation, and tools needed to achieve stated goals. 

The finalization of the reorganization of the 

OCFO established seven directorates, each with 

a clearly defined function, based on the results 

of business process analyses. CFO Bulletin email communication links continued to be sent 

to Peace Corps staff, including country directors and administrative officers at posts. The 

Peace Corps’ IPBS was reengineered to align 

with posts’ field project designs, the agency’s 

Volunteer recruitment and delivery cycles, and 

Congressional planning and budget cycles. The 

information submitted by posts and domestic 

offices is used by the Peace Corps to make decisions on allocating resources with more focus 

on rewarding performance and ensuring that 

results are verifiably measured. Moreover, the 

agency developed and implemented an agencywide internal control program that incorporates 

input from a senior assessment team that meets 

quarterly, reviews self-assessments and corrective action plans, and monitors the progress of 

corrective actions.

These efforts have resulted in several improvements, including generating three of the five 

quarterly financial statements directly from the 

financial system (previously these statements 

were dependent on an external report generator) and implementing, or making scheduled 

progress on, actions to correct all external audit 

findings from the FY 2003 Gap Analysis and the 

FY 2004 and FY 2005 financial statement audits. 

This coming fiscal year will include further refinements in standardizing and systematizing 

account reconciliations, analysis to decisionmakers, procedures for capital assets, and internal control testing. The agency’s goal remains to 

continuously improve financial processes and 

data integrity, culminating in an unqualified 

opinion on its financial statements no later than 

FY 2009.

Expanded E-government 

Expanded e-government is key to fostering a 

citizen-centered government with a greater volume of service at lower costs. The Peace Corps’ 

e-government initiatives are geared toward 

overcoming agency bureaucratic divisions and 

increasing productivity and the ease of electronic access for citizens, which facilitates program 

and operation transparency. The Peace Corps 

has witnessed annual progress in its systems 

maturation, from a low-tech operating environment to a high-tech enabled agency.

The Volunteer delivery system (VDS) is a continuous cycle of Volunteer recruitment, screening, 

and placement that allows the Peace Corps to 

deliver suitable, trained Volunteers to meet host 

country needs. The Peace Corps has aligned the 

VDS to speed up the application process and to 

reach minority groups more effectively. Internal 

communication was streamlined and overall response times to applicants was reduced. Recent 

enhancements include an online status check; 
The Peace Corps :: performance and accountability report :: fiscal year 2006 19

Management’s Discussion and Analysis

automatically generated e-mails to questions 

posed by applicants; online reference checks, 

medical history form, and reference submissions; downloadable forms necessary to complete applications; and online training materials. These enhancements have produced cost 

savings because application packages are no 

longer printed, compiled, and mailed to applicants. This solution will be further integrated 

with wireless technology, collaborative efforts, 

and enhanced Web-based solutions, including 

the Peace Corps website, the Office of Private 

Sector Initiatives’ website, and the agency’s Intranet. Additional plans for FY 2007–2009 include adding country-specific resources to the 

electronic process for invitees.

In the current fiscal year, the Peace Corps released a new version of the Volunteer information database application (VIDA), which allows 

posts to manage their Volunteers using a standard system, process, and reports. This version 

of VIDA included a new “whereabouts” report 

for traveling Volunteers and enhancements to 

improve emergency action plan (EAP) support 

and system usability for posts. The agency implements VSAT technology in countries where 

the telecommunications infrastructure does not 

support stable telephone and Internet services. 

(VSAT stands for “very small aperture terminal,” 

an earthbound station used in satellite communications of data, voice, and video signals.) In 

FY 2006, this technology was implemented in 

Botswana, Cameroon, Cape Verde, The Gambia, 

Mozambique, Namibia, Swaziland and Zambia. 

The Peace Corps continues to implement IT security policy and disaster recovery plans to secure data stored and processed on agency computers. This enables the agency to be compliant 

with federally mandated continuity of operations (COOP) plan requirements. The agency 

continues to move its legacy systems away from 

older mainframe technologies to Web-enabled 

distributed environments, providing vast potential for e-government solutions and service 

delivery. Some recent e-government investments include developing an improved vehicle 

fleet plan for posts with established criteria, 

automated leases, and property agreements; 

institutionalizing a state-of-the-art electronic, 

integrated capital property inventory tool; automating space review and usage, including 

new offices, as needed; updating computerized 

acquisition and shipping processes; revamping 

internal and external mail delivery systems; issuing and maintaining data on security badges; 

and introducing “Prospect Manager,” a software application to help recruiters track information on prospective Volunteers. 

Planned activities for FY 2007–2009 include: 

•	 Addressing the results of a Health Insurance 

Portability and Accountability Act (HIPAA) 

gap analysis and recommending systems and 

processes for compliance;

•	 Reengineering processes in the VDS to further enhance and enable an automated online administration and tracking system; 

•	 Identifying areas to develop new and underutilized recruitment markets, reduce application processing time, and increase applicantto-trainee retention rates via the Intranet and 

Internet; and

•	 Streamlining crime reporting processes 

through the enhancement of an electronic 

system with real-time incident reporting capabilities. 

Budget and Performance Integration

In FY 2006, the Peace Corps embarked on a major initiative to reengineer the IPBS, its primary 

program and resource management planning 

mechanism. The newly reengineered IPBS includes more context for planners about how 

the Peace Corps system is integrated into the 

federal process. Posts and domestic offices are 

encouraged to maintain their strategic plans 

unless unexpected contingencies emerge. They 
Management’s Discussion and Analysis

20 The Peace Corps :: performance and accountability report :: fiscal year 2006

now must report back on results from last year’s 

strategic plan goals for the first time with data 

that can be rolled into the Performance and Accountability Report submission. Budget holders 

and managers have increased flexibility and 

responsibility to manage their own budgets. 

More attention is paid to Volunteer-year charts, 

which are submitted by posts each quarter. Reprogramming has been defined and thresholds 

for budget adjustments have been revised. Posts 

and major offices will perform internal monthly 

reviews of budget execution, and the OCFO will 

review the budget execution of major offices 

and posts quarterly. 

Another key advance for the agency was the 

alignment of performance reviews with the midyear budget review process. This formal process 

includes a presentation to the Director in which 

offices are held accountable for their budget and 

performance results. An integrated mid-year 

review allows for resources—both funding and 

human—to be reallocated to undertake a correction in course if there are challenges in meeting 

performance goals or to validate positive actions 

taken to meet the performance targets. 

In FY 2005, the Peace Corps received its first 

Program Assessment Rating Tool (PART) review 

and received an “effective” rating. The resulting 

PART improvement plan outlined the need for 

the agency to identify new strategic objectives 

with outcome-oriented targets and indicators 

more closely aligned to the Peace Corps’ mission 

statement. In fall 2005, the agency embarked 

on an effort to revise its 2003–2008 strategic 

plan to provide an interim adjustment for fiscal 

years 2006–2008. Improvements were made to 

better align the plan to the Peace Corps’ three 

goals and internal processes, including new and 

modified strategic objectives with outcome-oriented targets and indicators. The Peace Corps 

completed, and OMB approved, the revised version of the agency’s strategic plan, which was 

included in the FY 2007 Congressional Budget 

Justification (CBJ). Throughout FY 2006, the 

agency worked to enhance its internal controls 

and documentation of processes surrounding 

strategic performance reporting. The enhanced 

documentation allows for greater continuity 

and reliability in reporting and helps mitigate 

the effects of staff changes on consistent performance reporting.

Education Volunteer, Mongolia: Peace Corps Volunteers educate new generations of children in the countries where they serve. 
P e r f o r m a n c e s e c t i o n
Performance Section

22 The Peace Corps :: performance and accountability report :: fiscal year 2006

Performance Report

The Peace Corps’ mission of promoting world 

peace and friendship is accomplished through 

the work of Peace Corps Volunteers as they 

transfer skills and build cross-cultural understanding in partner countries throughout the 

world. The agency operates in host countries 

that have invited the Peace Corps to assist in 

meeting their development needs. Through 

their work, Peace Corps Volunteers build bridges of understanding between Americans and 

host country nationals. 

The Peace Corps uses performance goals and 

measures that focus on providing skilled Volunteers to meet host country needs, supporting the 

health and safety of the Volunteer, and ensuring 

that Volunteers reflect the face of America to host 

countries. The measures also look at the efficiency and effectiveness of efforts to recruit, train, 

and support Volunteers as they carry out their 

work, as well as the exposure of Americans to 

other cultures because of the Peace Corps. These 

goals and measures provide a clear picture of the 

agency’s most important performance results.

In fiscal year (FY) 2006, the Peace Corps made 

significant strides in improving its performance 

reporting process. In fall 2005, the agency began to revise its 2003–2008 strategic plan to 

provide an interim adjustment for fiscal years 

2006–2008. Improvements were made to better 

align the plan to the Peace Corps’ three goals 

and internal processes, including new and 

modified strategic objectives with outcome-oriented targets and indicators. The Peace Corps 

completed, and OMB approved, the revised version of the agency’s strategic plan, which was 

included in the FY 2007 Congressional Budget 

Justification.

Program Assessment Rating Tool 

The interim adjustment was in response to the 

Peace Corps’ first-ever Program Assessment 

Rating Tool (PART) review, which occurred in 

FY 2005. The Peace Corps received an “effective” 

rating, which indicates that the agency has set 

ambitious goals, achieved results, is well-managed, and improves efficiency. The PART review 

process also includes recommendations for improvement, called the PART improvement plan. 

The Peace Corps’ improvement plan outlined the 

need to identify new strategic objectives with 

outcome-oriented targets and indicators more 

closely aligned to the agency’s mission statement. In response, the Peace Corps produced 

the interim adjustment to the strategic plan described above. 

The improvement plan also refers to the agency’s need to better measure Volunteers’ effectiveness in carrying out the Peace Corps’ second 

goal of promoting a better understanding of 

Americans on the part of the peoples served. The 

agency continues to work to identify alternate 

appropriate measures of this goal. Moreover, 

the Peace Corps conducted a review of field efforts and tasked a research team with exploring 

an appropriate data collection tool. 

In summer 2006, the agency embarked on a 

broader effort to develop increasingly sophisticated research methods for measuring outcomes. The strategic research and information 

team, composed of leaders within the organization with backgrounds in data use and management, is actively developing a plan for greater 

outcome measurement and a new structure to 

increase the agency’s research, evaluation, and 

strategic planning functions.

Office of Inspector General Evaluations

The Peace Corps’ Office of Inspector General 

(OIG) regularly conducts program evaluations of 

the effectiveness of programs that support Peace 

Corps Volunteers. Evaluators analyze the management and program operations of the Peace 

Corps at both overseas posts and domestic offices. They identify best practices and recommend 

program improvements and means to comply 

with Peace Corps’ policies. During FY 2006, the 

0
Performance Section

The Peace Corps :: performance and accountability report :: fiscal year 2006 23

OIG conducted 14 program evaluations in 13 

countries. Challenges cited in program evaluations relate to technical and local language 

training, Volunteer behavior issues, and support 

to Volunteers in their sites.

Performance Reporting Process

Throughout FY 2006, the agency enhanced its internal controls and documentation of processes 

surrounding strategic performance reporting in 

response to the auditor’s finding in the FY 2005 

Performance and Accountability Report (PAR) of 

insufficient controls. The enhanced documentation allows for greater continuity and reliability in reporting and helps mitigate the effects 

of staff changes on consistent performance reporting. The new reporting process was tested 

using documented reporting processes during 

the mid-year budget review.

Addressing mid-year performance results 

alongside the budget reviews allowed the agency to take another positive step in aligning performance with budgeting. This formal process 

includes a presentation to the Director in which 

offices are held accountable for their budget and 

performance results. An integrated mid-year 

review allows for funding and human resources 

to be reallocated to undertake a correction in 

course if there are challenges in meeting performance goals or to validate positive actions 

taken to meet performance targets.

Due to the interim adjustment to the agency’s 

strategic plan, the FY 2006 performance results include many new or revised goals and indicators. This makes providing past fiscal year 

data particularly challenging. Thus, the results 

include past fiscal year data for a sampling of 

performance goals. The Peace Corps’ FY 2006 

performance results are based on reliable, actual data that are complete as of the production of the results at the close of the fiscal year. 

However, the data are limited by instances of 

unforeseen challenges with technology as well 

as the handling of data that flow in beyond 

the reporting dates. Overall, the Peace Corps 

has made great progress in documenting and 

streamlining its performance reporting process 

at the agency and can provide solid results on 

performance measures.

Performance Summary

FY 2006 is the first year for the agency to report 

out on the current set of ambitious but achievable performance goals and indicator targets 

outlined in the strategic plan. In FY 2006, the 

agency was on or above target for five of the 

eight performance goals and 26 of the 33 performance indicators. In some cases results were 

more healthy than anticipated; in other areas 

results fell short of the goal. Overall, the agency will continue to work to achieve its strategic 

goals and to serve the Volunteer, host country 

nationals, and the American people.
Performance Section

24 The Peace Corps :: performance and accountability report :: fiscal year 2006

Performance Goal and Brief Description

Performance Goal

Against Target

Performance Indicators Against Target

Under On Over

1.1 Volunteers serving Under 0 3 1

1.2 Transfer skills and understanding Over 0 2 2

1.3 Represent American diversity Under 2 0 3

2.1 Quality healthcare Over 1 1 1

2.2 Volunteer safety On 0 1 2

3.1 Interactions with Americans to build

cross-cultural understanding Under 2 1 2

4.1 Efficient application process Over 0 0 5

4.2 Maintain resignation rate Over 2 2 0

Total Performance Goals=8 3 Under

1 On

4 Over

7 10 16

Note: 	 The three categories of performance measurement are under, on, or over target. A number that is under target is any number below

the target; a number that is on target is any number that is exactly on target or a maximum of 2 percent higher; and a number that

is over target is any number that is more than 2 percent higher than the target.
Performance Section

The Peace Corps :: performance and accountability report :: fiscal year 2006 25

FY 2006 Performance Results

Results and Analysis:

As of September 30, 2006, the Peace Corps fielded 7,749 Volunteers working around the globe to carry 

out the mission of the agency.6 While fielding more than 7,700 Volunteers is a significant achievement, 

the Peace Corps did not meet its target number of Volunteers in the field due to events in Bangladesh, 

Chad, and East Timor during FY 2006, which necessitated suspending operations in those countries. 

The Peace Corps plans to reach targeted Volunteer levels in FY 2007, including the infusion of Volunteers 

into a newly established Peace Corps program in Cambodia and in a reopened program in Ethiopia.

Performance Indicators 1.1 FY 2006 Target FY 2006 Results

i. Number of new country entries 1 1

ii. Percentage of Peace Corps focus countries participating in

the President’s Emergency Plan for AIDS Relief (PEPFAR) *

100% 100%

iii. Number of Crisis Corps Volunteers (all funding sources) 100 223

iv. Overall visits to website 8.3 million 8.3 million

*	 This is a measure of whether the Peace Corps is partnering with PEPFAR in all of

the nine PEPFAR focus countries in which the agency currently has a presence.

	 This 7,749 is an “on board” count of all Peace Corps Volunteers and trainees, Crisis Corps Volunteers, and United Nations Volunteers from all 

funding sources serving under the Peace Corps as of September 30, 2006. It includes 111 Volunteers funded by the President’s Emergency Plan for 

AIDS Relief, as well as 10 Volunteers funded through an interagency agreement with the U.S. Agency for International Development on tsunami 

relief efforts in Thailand.

Strategic Goal 1

Assist interested countries with their identified needs by gradually expanding the number of trained 

Volunteers serving overseas; broadening the impact on the lives of men and women in their host communities by transferring tangible skills; and helping to promote an understanding of Americans, including representing American diversity, at a rate consistent with annual funding.

Outcome Goals:

1.1 Assist interested countries with their identified needs by gradually expanding the number of 

trained Volunteers serving overseas from 7,733 in FY 2004 to 8,000 in FY 2008, at a rate consistent 

with annual funding.

1.2 Broaden the impact of Volunteers on the lives of men and women in their host communities by 

transferring tangible skills, as measured by increasing Volunteers reporting in the Peace Corps’ 

close-of-service survey that they were “adequately” to “exceptionally” effective in transferring 

knowledge and skills to members of their host community, from 80 percent in FY 2006 to 82 percent by FY 2008. 

1.3 Represent American diversity in Peace Corps host communities by increasing numbers of Peace 

Corps applicants representing diverse ethnicities and people 50 and over by 4 percent, from FY 

2005 level of 24 percent to 28 percent by FY 2008. 

Performance Goal 1.1.1 

Increase the number of Peace Corps Volunteers 

to 7,850 by FY 2006.

FY 2006 Goal FY 2006 Actual

7,850 7,749

Results

FY 2002 FY 2003 FY 2004 FY 2005

6,678 7,533 7,733 7,810
Performance Section

26 The Peace Corps :: performance and accountability report :: fiscal year 2006

Results and Analysis:

In accomplishing the agency’s goals for modest expansion, the Peace Corps continues to respond to 

the numerous countries requesting a Peace Corps presence by opening new programs that focus on 

meeting the unique needs of the host country. In FY 2006, the Peace Corps opened a program in the 

Kingdom of Cambodia. This historic new country entry enables Volunteers to work for the first time in 

Cambodia focusing on issues of education and health.

The Peace Corps continues to be a valuable participant in the President’s Emergency Plan for AIDS 

Relief (PEPFAR). The Peace Corps has a presence in nine of the 15 PEPFAR focus countries.7 All nine of 

these posts actively participated in PEPFAR during FY 2006, expanding and enhancing their ongoing 

efforts in the fight against HIV/AIDS. In addition, seven other posts participated in the PEPFAR program, and Volunteers throughout the world integrated HIV/AIDS awareness messages into their work. 

Peace Corps Volunteers, by living and working at the grassroots level in communities and speaking the 

local language, are uniquely suited to share culturally appropriate messages in HIV/AIDS education 

and prevention. In the 2006 Peace Corps Volunteer survey, 55 percent of Volunteers reported being 

engaged in HIV/AIDS activities as part of their Peace Corps work, which represents a major increase 

over the 2004 survey in which 25 percent reported involvement.

In FY 2006, the Peace Corps’ Crisis Corps program sent its 1,000th Volunteer into service since the 

program’s inception in 1996. Returned Peace Corps Volunteers continue to put their specialized skills 

to work on short-term assignments ranging from disaster relief to HIV/AIDS prevention. It was a very 

active year for the Crisis Corps program, and the number of natural disasters and infusion of funds 

from various sources accounts for the agency being significantly over its targeted goal. Crisis Corps 

deployed 138 Volunteers to the Gulf Coast region for recovery assistance to those impacted by Hurricanes Katrina and Rita, which was funded by, coordinated with, and under the authority of the Federal 

Emergency Management Agency. Crisis Corps also sent 21 Americans to Southeast Asia through an 

interagency agreement with the U.S. Agency for International Development to provide relief to those 

affected by the devastation wrought by the tsunami. Throughout FY 2006, Crisis Corps fielded an additional 51 Volunteers, plus 13 PEPFAR-funded Crisis Corps Volunteers for a total of 223 Volunteers from 

all funding sources. 

The overall visits to the agency’s website, www.peacecorps.gov, increased from 7.9 million in FY 2005 

to 8.3 million in FY 2006. The agency was on target with its aggressive FY 2006 goal and expects solid 

growth next fiscal year through enhancements of website content, such as reaching out to diverse 

audiences, revising its “kids” site, creating a “teens” site, and incorporating new technology such as 

really simple syndication (RSS) feeds. The number of Web applications and online donations, two key 

outcomes of Peace Corps’ Web presence, continued to make solid gains in FY 2006. 

Performance Goal 1.2.1.

Incrementally increase the percentage of respondents to the Peace 

Corps close-of-service survey reporting the effectiveness of transferring knowledge and skills to members of their host community 

as “adequately” to “exceptionally” to 80 percent by FY 2006.* 

PEPFAR has identified 15 focus countries. The Peace Corps has posts in nine of these focus countries—Botswana, Guyana, Kenya, Mozambique, 

Namibia, South Africa, Tanzania, Uganda, and Zambia. The other focus countries are Ethiopia, Haiti, Ivory Coast, Nigeria, Rwanda, and 

Vietnam.

FY 2006 Goal FY 2006 Actual

80% 83%

* This is a new performance goal as of FY 2006.

No data from past fiscal years is available.
Performance Section

The Peace Corps :: performance and accountability report :: fiscal year 2006 27

Results and Analysis:

One of the Peace Corps’ main objectives is for Volunteers to transfer skills to members of the communities in which they live and work in order to make a meaningful and sustainable difference in 

the lives of those they serve. Volunteers are instructed on methods to build the capacity of the host 

country nationals with whom they work and to help teach solutions that will be sustainable within the 

community. According to the Volunteers surveyed upon completion of their service, via the new closeof-service (COS) survey implemented in FY 2006, more than 83 percent of Volunteers stated that they 

have effectively transferred knowledge and skills to members of their host community. 

Performance Indicators 1.2 FY 2006 Target FY 2006 Results

i. Number of individuals assisted by Volunteers (e.g., students, farmers, community

members) as reported via the prior year’s project status report annual review 

2,165,000 2,187,000 

ii. Number of service providers trained by Volunteers (e.g., teachers, health clinic 

workers, agriculture extension agents) as reported via the prior year’s project 

status report annual review

113,800 126,300

iii. Number of community-initiated, Volunteer-led, Partnership Program projects 430 435

iv. Increase the extent Volunteers report that they have helped host country nationals 

gain a better understanding of the United States and its people, as reported by the 

Peace Corps close-of-service survey

90% 95%

Results and Analysis:

The agency was slightly over its targets for the numbers of individuals assisted and service providers 

trained by Volunteers. The Center for Field Assistance and Applied Research, through its annual project status review process, compiles annual data and reviews observations related to programming and 

training as submitted by the field. The Peace Corps accomplishes its goal of transferring skills to people of interested countries by working to build the capacity of men, women, girls, and boys so they can 

manage their own development in a sustainable manner. Volunteers help build capacity by increasing 

the knowledge, improving the skills, and promoting behavior change of individuals and families in the 

countries they serve. Capacity-building efforts are targeted toward individuals, service providers, and 

organizations, who can, in turn, teach fellow community members. 

The number of Partnership Program projects was on target with the FY 2006 goal. Partnership projects 

are Volunteer-led, community-initiated projects that can only be funded if they meet the Peace Corps’ 

defined standards of sustainability, community involvement, and community need. Through Volunteers, Partnership Program projects help communities realize goals ranging from acquiring equipment for sports teams to building latrines in schools.

One of the key goals of each Volunteer is to help promote a better understanding of Americans on the 

part of the host country community in which the Volunteer is serving, and the Peace Corps reached 

its performance indicator in this regard. Volunteers, by sharing about themselves, their families, and 

their life in the United States, help build a bridge of cross-cultural understanding. By living and working in local communities and speaking the local language, Volunteers forge relationships with their 

host country community members, and they model a spirit of friendship, understanding, and volunteerism on behalf of Americans.
Performance Section

28 The Peace Corps :: performance and accountability report :: fiscal year 2006

Performance Goal 1.3.1.

Incrementally increase the number of Peace Corps applicants 

representing diverse ethnicities and people 50 and over by 2 

percent from an FY 2005 level of 24 percent to 26 percent by 

FY 2006.

FY 2006 Goal FY 2006 Actual

26% 24%

Results

FY 2002 FY 2003 FY 2004 FY 2005

25.0% 25.9% 26.1% 24.5%

Results and Analysis:

The Peace Corps, while working to gradually expand the number of Volunteers, is also attempting to 

increase the number of underrepresented ethnic and age groups applying to the Peace Corps. This effort ensures that the Peace Corps continues to do its best to reflect the diverse face of the United States. 

While the agency matched its FY 2005 level of 24 percent, it is slightly below the FY 2006 target of 26 

percent. There continues to be a strong emphasis on recruiting applicants of diverse ethnicities and 

those over 50, including employing pilot recruitment programs.

Performance Indicators 1.3 FY 2006 Target FY 2006 Results

i. Percentage of applicants over the age of 50 7.8% 7.2% 

ii. Percentage of applicants of diverse ethnicities 19% 17.5%

iii. Total visitors to website who access minority recruitment pages 

and/or scarce skills, family pages

430,000 442,624

iv. Number of articles placed in newspapers and other media that 

focus on diverse Volunteers and/or target diverse audiences

175 240

v. Total number of public service announcements (PSA) placements 

in minority- and diversity-geared media

3,500 5,300

Results and Analysis:

In FY 2006, the agency experienced a slight decrease in the percentage of applicants over 50 as well as 

applicants of diverse ethnicities. Several approaches will be used to increase the diversity of the Peace 

Corps’ applicant pool, including presentations at conventions targeting older and diverse populations, increased press attention, increasing the number of older recruiters hired, and pilot projects 

for diversity recruitment. 

One way to enhance recruitment efforts targeting diverse audiences is to raise awareness about diverse Volunteers serving in the Peace Corps through media exposure. The agency exceeded the target 

number of articles that focused on diverse Volunteers and/or appeared in publications written for diverse audiences, which often show images and tell stories about Peace Corps Volunteer service. 

Visitors to the website who accessed minority recruitment pages and/or scarce-skills and family pages 

were just above the performance goal. The growth in this area is the result of more outreach into minority communities with specific content for those populations. 

The Peace Corps accomplished 5,300 placements for its PSAs in minority- and diversity-geared media 

for FY 2006, which is substantially above the goal. Significant factors contributing to this success were 

the development of a new radio PSA that appeals to radio stations with an urban format (reaching a 

wider African-American audience) and including Spanish language versions of the PSA for both television and radio.
Performance Section

The Peace Corps :: performance and accountability report :: fiscal year 2006 29

Strategic Goal 2

Ensure a quality Volunteer experience by increasing the quality of healthcare and managing the safety 

and security risk factors in each of the communities where the Volunteers live. 

Outcome Goals:

2.1 Increase the percentage of Volunteers indicating feeling “adequately” to “exceptionally” satisfied 

with their in-country healthcare from FY 2002 level of 75 percent to 82 percent by FY 2008.

2.2 Increase the percentage of Volunteer survey respondents indicating they feel safe most of the time 

(“usually safe” to “very safe”) where they live from FY 2002 level of 86 percent to 88 percent by FY 

2008.

Performance Goal 2.1.1.

Incrementally increase the percentage of respondents to the 

biennial Peace Corps Volunteer survey indicating feeling “adequately” to “exceptionally” satisfied with their in-country 

healthcare from the FY 2002 level of 75 percent to 80 percent 

by FY 2006.

FY 2006 Goal FY 2006 Actual

80% 92%

Results

FY 2002 FY 2003 FY 2004 FY 2005

90% N/A* 87% N/A*

Results and Analysis:

The health, safety, and security of every Volunteer is the Peace Corps’ highest priority and is reflected 

as such in the agency’s planning. The 2006 Peace Corps Volunteer survey demonstrates that the vast 

majority of Volunteers are satisfied with the healthcare they receive while they live and work in their 

communities around the world.

Performance Indicators 2.1 FY 2006 Target FY 2006 Results

i. Percentage of Volunteers medically evacuated to Washington, D.C., reporting they are 

satisfied with their medical evacuation care as measured by the medevac survey

90% 81% 

ii. Percentage of Volunteer respondents reporting feeling “adequately” to “exceptionally” 

prepared, both physically and mentally, to meet the challenges of Peace Corps service 

as measured by the Peace Corps close-of-service survey

90% 91%

iii. Incidence of falciparum malaria in Africa region 

(measure is in cases per 100 Volunteer/trainee years)

Less than 6.0 2.1

Results and Analysis:

Peace Corps Volunteers serve in challenging environments throughout the world, and the health of 

Volunteers is one of the agency’s top priorities. In extreme circumstances, a Volunteer may need to be 

medically evacuated to Washington, D.C., and the satisfaction of these Volunteers with the care they 

receive continues to be a focus of the agency. During FY 2006, the data from the medevac survey given 

those Volunteers reported that the agency fell short of its goal and the FY 2005 results of 93 percent 

satisfaction. This decline may be attributable to a shift in the agency’s approach to handling Volunteers requiring medical evacuations by utilizing closer regional hubs for their care. In FY 2005, 240 

Volunteers were medically evacuated to Washington, D.C., and 176 received care at regional centers 

overseas. In FY 2006, the percentage shifted appreciably; 192 were served in medical evacuation centers overseas and 187 received care in Washington, D.C. Moreover, those brought to Washington, D.C., 

were often the most serious cases, which can lead to the termination of a Volunteer’s service for medical reasons. While the lower numbers may reflect displeasure with the circumstances, the agency will 

* There are no results reported for these years because the

Peace Corps Volunteer survey is conducted every other year.
Performance Section

30 The Peace Corps :: performance and accountability report :: fiscal year 2006

nonetheless undertake efforts to address the concerns of medical evacuees, including closely scrutinizing the feedback received in the surveys. 

The Peace Corps focuses on equipping Volunteers so that they have the tools they need to deal with the 

changes they will face in their communities. This training on physical and emotional health is a focus 

of pre-service training and is reinforced throughout a Volunteer’s term of service. The close-of-service 

survey results from FY 2006 reported that the vast majority of Volunteers are satisfied with the preparation they receive during training to meet the mental and physical challenges of Peace Corps service. 

Furthermore, Volunteers in malaria-prone areas are thoroughly trained on the proper protocols and 

the importance of taking their malaria prophylaxis, which accounts for an incidence rate that is well 

below the target level.

Performance Goal 2.2.1.

Incrementally increase the percentage of respondents to the 

biennial Peace Corps Volunteer survey indicating that Volunteers feel safe most of the time (“usually safe” to “very safe”) 

where they live by 1 percent from FY 2002 level of 86 percent to 

87 percent by FY 2006.

FY 2006 Goal FY 2006 Actual

87% 88%

Results

FY 2002 FY 2003 FY 2004 FY 2005

86% N/A* 88% N/A*

Results and Analysis:

The safety and security of the Volunteer is the agency’s highest priority. Safety and security information 

is incorporated into all aspects of Volunteer recruitment, training, and service. The Peace Corps Volunteer survey results indicate that an overwhelming majority of Volunteers feel safe where they live.

Performance Indicators 2.2 FY 2006 Target FY 2006 Results

i. Percentage of posts receiving safety and security report recommendations annually 85% 85% 

ii. Percentage of Volunteer respondents reporting the safety and security portion of their 

pre-service training as “adequate,” “effective,” or “very effective” as measured by the 

biennial Volunteer survey

85% 94%

iii.

Percentage of Volunteer respondents reporting they were “somewhat,” “considerably,” 

or “completely” satisfied with support provided by Peace Corps staff for safety and 

security, as measured by the biennial Volunteer survey

85% 92%

Results and Analysis: 

As a measure of the impact that the safety and security support staff has had on Volunteer safety, the 

agency’s Office of Safety and Security determined that 85 percent of posts would be visited by safety 

and security officers to assess and make recommendations for improvements to their Volunteer safety 

support systems. By the end of FY 2006, the office had achieved this goal. Additional visits were made 

to assist in staff training, crisis management, and collaboration with embassies on physical security 

recommendations or office relocations; follow-up on previous recommendations; and other safety 

and security programmatic support.

An important goal related to a Volunteer’s perception of safety and security was to increase the percentage of Volunteer respondents to 85 percent who feel that the safety and security information received during pre-service training was adequate to very effective. This was also greatly surpassed with 

survey data revealing that 94 percent reported favorably. By including region- and post-specific safety 

* There are no results reported for these years because the

Peace Corps Volunteer survey is conducted every other year.
Performance Section

The Peace Corps :: performance and accountability report :: fiscal year 2006 31

and security information in all Welcome Books, invitees become aware of the overall security environment of prospective posts. Additionally, the information provides them with an understanding of the 

agency’s approach to safety and security. Receiving this information before leaving home enables invitees to better absorb the messages that are included in staging and pre-service training. 

Additionally, 91 percent of Volunteers reported that they were somewhat to completely satisfied with 

the support provided by Peace Corps staff regarding their safety and security, which is well above 

the 85 percent goal. The presence of regional Peace Corps safety and security officers in the field, 

safety and security coordinators at each post, and safety and security desk officers at headquarters 

has improved communication, coordination, and oversight of safety and security systems. The agency 

is encouraged by the positive perceptions Volunteer have of their security, training, and support. The 

Peace Corps will continue to focus on this important issue, remaining vigilant to maximize Volunteer 

security overseas.

Youth Development Volunteer, Romania: Volunteers enhance their safety and security by integrating into the communities in 

which they live and work. 
Performance Section

32 The Peace Corps :: performance and accountability report :: fiscal year 2006

Strategic Goal 3

Increase the exposure of Americans to other cultures by sharing Volunteer experiences and stories in 

numerous venues, including the classroom, special events, community visits, and through electronic 

means, as well as engaging those who have completed their service in ongoing Peace Corps-supported 

volunteer opportunities.

Outcome Goal:

3.1 Increase the number of interactions with Americans to further the Peace Corps’ goals through 

Peace Corps supported activities to 27,456 (aggregate of indicators i. through iv.) by FY 2008.

Performance Goal 3.1.1.

Increase the number of interactions with Americans to further the 

Peace Corps’ goals through Peace Corps supported activities to 

24,382 in FY 2006.*

FY 2006 Goal FY 2006 Actual

24,382 23,377

Results and Analysis:

While the number of interactions with Americans to further Peace Corps goals fell just under the targeted goal, education activities such as Peace Corps’ Coverdell World Wise School and Fellows USA 

programs had healthy levels of participation. Expanded opportunities for Peace Corps Volunteers and 

returned Peace Corps Volunteers (RPCVs) to share their experiences with Americans as well as improved efforts to capture such interactions should allow the agency to meet its goal in FY 2007. 

Performance Indicators 3.1 FY 2006 Target FY 2006 Results

i. RPCV interactions with the American public in communities and on campuses 

nationwide during Peace Corps Week and throughout the year through activities 

supported by the Peace Corps

14,550 14,387

ii. Donors supporting Peace Corps Volunteer projects through private sector contributions 5,500 4,588

iii. U.S. educators connecting with Peace Corps Volunteers through the Peace Corps’ 

Coverdell World Wise Schools correspondence match program

4,000 4,037

iv. Fellows/USA participants serving in communities nationwide 332 365

v. Visits per year to the Peace Corps’ Coverdell World Wise School website that contains 

lesson plans, Volunteer stories, and other educational resources for use in the classroom 

and beyond

1.26 million 2 million

Results and Analysis:

Even with high levels of participation during Peace Corps Week and events associated with the agency’s 45th anniversary, the agency missed its targeted number of interactions of RPCVs with the American public by less than two percent. The activities of RPCVs help carry the message of understanding of 

other cultures as they share their stories in schools, community centers, and elsewhere in the United 

States. The agency will continue to look at ways to encourage even greater RPCV participation, provide 

them tools to realize the Peace Corps’ third goal, and improve efforts to capture the breadth of RPCV 

participation through activities supported by the Peace Corps. 

The number of donors supporting Peace Corps Partnership projects failed to meet the FY 2006 target. 

The average donation amount increased, which led to a corresponding decrease in donors required to 

meet project needs. The Office of Private Sector Initiatives continues to shift its outreach strategy to 

* This is a new performance goal as of FY 2006.

No data from past fiscal years is available.
Performance Section

The Peace Corps :: performance and accountability report :: fiscal year 2006 33

reach more schools and civic groups, even though groups of people are counted as one donor. This, 

and the decrease in the amount of funding required by Volunteer-led projects, will make expanding 

donor numbers a continued challenge. Regardless, the office will continue to reach out to a wide variety of donors as required to meet Volunteer project funding needs.

The number of educators connecting with Peace Corps Volunteers through the Coverdell World Wise 

Schools (CWWS) program met the target performance level. After experiencing database difficulties 

that hampered optimum program matching, the program implemented an aggressive strategy to increase educator enrollment, which helped provide atypical teacher enrollment gains since mid-year. 

The CWWS program will continue with its marketing strategy, enabling Volunteers to match with teachers, which helps to bring their experiences alive to students nationwide.

The CWWS website, a key avenue for connecting with schoolchildren across America, exceeded its 

targeted number of visits per year. An aggressive marketing campaign supplemented by a regular enewsletter and fresh content has driven CWWS website traffic to historic highs. 

The Peace Corps’ Fellow/USA program not only exceeded the target for participants, but experienced 

the highest enrollment since the program’s inception in 1985. The addition of 10 new university partners and two new programs in FY 2004 and FY 2005 has led to unexpectedly strong enrollments in FY 

2006. Fellows/USA participants use the knowledge, skills, and competencies they developed during 

their Peace Corps service to benefit the American people by simultaneously working in underserved 

U.S. communities as they pursue graduate degrees. 

The Corcoran School, Syracuse, New York: Peace Corps Volunteers promote cultural awareness of the countries in which they 

served to schoolchildren and community groups, giving Americans the opportunity to learn from their experiences. 
Performance Section

34 The Peace Corps :: performance and accountability report :: fiscal year 2006

Strategic Goal 4

Increase the retention level of Americans interested in the Peace Corps by better facilitating the process 

of obtaining information, applying, joining and completing their Volunteer service.

Outcome Goals:

4.1 Improve the responsiveness of the Volunteer application process by streamlining the application 

process and decreasing the Peace Corps’ response time to applicants by 7 percent from 156 days 

(aggregate of below indicators of timeliness) in FY 2005 to 146 days in FY 2008.

4.2 Maintain the overall 12-month Volunteer’s resignation rate (with resignation officially defined as a 

decision made by a Volunteer/trainee that he/she no longer wishes to continue in Peace Corps service) at 10 percent or less.

Performance Goal 4.1.1.

Decrease the Peace Corps’ response time to applicants by 2 percent 

from 156 days in FY 2005 to 154 days in FY 2006.*

FY 2006 Goal FY 2006 Actual

154 138

Results and Analysis:

The agency is pleased to have exceeded its FY 2006 goal of response time to applicants by being 16 days 

faster than the 154-day goal. The application process for becoming a Peace Corps Volunteer has numerous stages, which enables the agency to recruit and thoroughly screen applicants for skills, medical, 

and suitability issues prior to approving and inviting them for Peace Corps service. The Peace Corps’ 

application process was broken down into its various stages to better analyze efficiencies. Cumulatively, these processing days allow the agency to identify its overall responsiveness to applicants.

Performance Indicators 4.1 FY 2006 Target FY 2006 Results

i. Number of days from receipt of application to nomination 66 62

ii. Number of days from nominee’s completed health status review to medical kit sent 9 8

iii. Number of days from receipt of completed medical kit to medical qualification 32 30

iv. Number of days from medical qualification to invitation 47 38

v. Percentage of applicants who submit their Volunteer applications over the Internet 84% 91%

Results and Analysis:

The 11 regional recruitment offices (RROs) located throughout the United States increased the efficiency of their application processing methods, which led to fewer days from application to nomination 

than the FY 2006 target. 

The Placement Unit has processed medically qualified applicants and issued invitations to those individuals in a timely manner. This part of the Volunteer delivery system (VDS) includes finalized information from the Office of Medical Services (OMS), posts, and applicants before the official invitation is 

issued. The ease in using the online application and electronic references have produced better-thanexpected results. In fact, the agency surpassed its goal of applicants submitting their applications over 

the Internet—91 percent applied online, which was 7 percent over the FY 2006 target and 8 percent 

over the FY 2005 level.

* This is a new performance goal as of FY 2006.

No data from past fiscal years is available.
Performance Section

The Peace Corps :: performance and accountability report :: fiscal year 2006 35

Additionally, OMS staff, including those sending the medical kits and the screening nurses responsible for determining medical qualification, exceeded their targeted turnaround times, allowing the 

agency to meet its FY 2006 goals.

Performance Goals 4.2.1.

Maintain the overall 12-month Volunteer’s resignation rate at 

10 percent or less in FY 2006.

FY 2006 Goal FY 2006 Actual

<10% 8.8%

Results

FY 2002 FY 2003 FY 2004 FY 2005

9.0% 8.0% 9.0% 8.6% Results and Analysis:

Retaining Volunteers is an area the Peace Corps has examined 

and analyzed carefully. The agency’s target to keep resignations for FY 2006 below 10 percent was 

achieved. Offices throughout the agency benefited from a more thorough analysis of early terminations 

in general, with a focus on resignations (officially defined as a decision made by a Volunteer/trainee 

that he/she no longer wishes to continue in Peace Corps service). A revised qualitative data instrument 

was implemented beginning in FY 2005 to collect more meaningful data on reasons Volunteers choose 

to resign. The agency continues to monitor early terminations (particularly resignations), and to use 

both quantitative and qualitative data to assist in improving recruiting, training, programming, and all 

other aspects of the Volunteer experience. 

Performance Indicators 4.2 FY 2006 Target FY 2006 Results

i. Percentage of sites described “very well,” “well,” or 

“adequately” prepared in the biennial Volunteer survey

80% 78%

ii. Percentage of Volunteer respondents reporting their pre-service training to manage 

cultural differences as “adequate,” “effective,” or “very effective” as measured by the 

biennial Volunteer survey

90% 91%

iii. Percentage of Peace Corps project and training programs reviewed annually to provide 

feedback for improvement to posts as reported via the prior year’s project status report/

training status report review process

95% 94%

iv. Percentage of Peace Volunteer respondents reporting their pre-service training as 

“adequate,” “effective,” or “very effective” in preparing them to maintain their mental/

emotional health, as measured by the biennial Volunteer survey

84% 85%

Results and Analysis:

The Peace Corps strives to retain Volunteers throughout their term of Peace Corps service by managing 

a quality program. However, life circumstances, such as family emergencies, sometimes cause Volunteers to resign early. These performance indicators were chosen in light of the difficulties Volunteers 

face that can lead to resignation, including challenges in adapting to the local culture, dealing with 

emotional or mental health issues, and struggling with the work environment. 

The Peace Corps met its goal on training Volunteers to manage cultural differences. The most safe 

and secure Volunteers are those who are well-integrated into their communities. The Peace Corps 

provides extensive training on cross-cultural awareness, enabling Volunteers to learn to function 

well in their new communities. Additionally, the agency provides Volunteers with extensive language 

training to help them adapt to their new environment and communicate with their host country community members.
Performance Section

36 The Peace Corps :: performance and accountability report :: fiscal year 2006

The Center for Field Assistance and Applied Research monitors the production and quality of programming and training (including the quality of materials provided to posts) with the regions through 

the annual project status report (PSR) review process. These evaluations provide feedback to posts 

on overall possible project improvements. Cohesive projects enable Volunteers to have well-defined 

work at their sites, which fits into a larger project goal addressing the identified needs of the host 

country. The agency reviewed and provided feedback on all Peace Corps posts that submitted annual 

reports; however, it was unable to review all plans during the PSR review process due to unexpected 

closures of Peace Corps posts during the year. Additionally, the agency was slightly under its goal for 

the adequacy of site preparation. Site development is a key function of post staff to effectively place 

Volunteers in communities. The agency will undertake efforts to review and improve programming 

and training and ensure that best practices on site development are shared and emphasized throughout the overseas posts.

The agency met its goal on preparing Volunteers to meet their mental/emotional health needs during 

their service. In FY 2006, the agency undertook efforts to equip Peace Corps medical officers in areas 

of mental health and Volunteer resiliency, including presenting information on mental and behavioral 

health at continuing medical education programs in all three of the Peace Corps regions overseas.

Information Technology Volunteer, Philippines: The Peace Corps provides support to Volunteers to meet their physical, emotional, 

language, and programmatic needs to help ensure Volunteers have a positive experience.
f i n a n c i a l s e c t i o n a n d n o t e s
The Peace Corps :: performance and accountability report :: fiscal year 2006

Financial Section and Notes

38

Letter from the Chief Financial Officer 

The fiscal year 2005 letter from the chief financial officer included a comment that the past three fiscal 

years (FY 2003–2005) were a time of transition for financial systems and for personnel. In that vein, 

this past year was a year of substantial maturation for financial systems, for the organization of the Office of the Chief Financial Officer (OCFO), and for key agency-wide financial processes—the internal 

control program and the Integrated Planning and Budget System (IPBS). The financial management 

process is not complete, but significant progress will facilitate future refinements. Our goal remains 

to continuously improve financial processes and data, culminating in an unqualified opinion on our 

financial statements no later than FY 2009. 

This effort to improve data integrity and regularly produce reliable, relevant, and timely financial reports will encompass:

•	 Intensifying an internal control/quality assurance program, to include internal (self ) and independent testing and metric monitorship;

•	 Increasing the use of financial management systems’ functionality and automated tools to facilitate reconciliations and analysis;

•	 Publishing current policy, procedural, and technical documentation;

•	 Developing, monitoring, and testing action plans to correct deficiencies identified by self assessments, the inspector general, and independent auditors; and

•	 Increasing agency-wide functional and technical training that, at a minimum, addresses requisite core competencies.

This past year, the OCFO made extensive progress by executing strategically minded plans built with 

tactical detail in the areas of organizational structure, technology, documentation, and tools needed 

to achieve the above goals. These included:

•	 Finalizing the reorganization of the OCFO. The reorganization, based on results of business 

process analyses, established seven directorates, each with clearly defined functions. 

•	 Continuing the numbered CFO Bulletin e-mail communication link to Peace Corps staff, including country directors and administrative officers at posts. Sixteen bulletins covering a wide 

range of subjects were disseminated through the end of FY 2006, educating field activities on 

sound financial management procedures. This information is also accessible to all staff via the 

CFO webpage.

•	 Reengineering the IPBS so it aligns the post’s field project design and Volunteer recruitment 

and delivery cycles with Congressional planning and budget cycles. The information submitted 

by posts and domestic offices is used by the Peace Corps to decide how and where to allocate 

resources, and it focuses on rewarding performance and ensuring that results are verifiably 

measured. Budget holders and managers have increased flexibility to manage their own budgets and are held more accountable through increased oversight.

0
The Peace Corps :: performance and accountability report :: fiscal year 2006

Financial Section and Notes

39

•	 Strengthening the management process to capture all capital assets. 

•	 Developing and implementing an agency-wide internal control program that incorporates a 

senior assessment team that meets at least quarterly, ensures self-assessments, advises corrective action plans when warranted, and monitors the progress of corrective actions.

•	 Publishing five OCFO position papers covering accounting and reporting policies.

These efforts have produced several tangible improvements, including:

•	 Generating three of the five quarterly financial statements directly from the financial system 

(previously these statements were dependent on an external report generator).

•	 Implementing, or making scheduled progress on, actions to correct all external audit findings 

from the FY 2003 Gap Analysis and the FY 2004 and FY 2005 financial statement audits. 

•	 Refining the value of fixed assets on the financial statement, including a downward adjustment 

of $9.7 million to the net book value of internal use software and identifying (and recording) 

assets not capitalized at acquisition.

•	 Expanding reconciliations of the fund balance with Treasury with the corresponding Treasury’s 

Governmentwide Accounting (GWA) account statement application; and accelerating the identification and resolution of statement-of-differences items.

•	 Intensifying validation of open obligations, which resulted in the return of millions of dollars in 

budgetary resources to the agency for current operations.

•	 Correcting general ledger anomalies, incompatibilities, and imbalances with corresponding 

subsidiary ledger data on a regular basis and, where applicable, modifying the system logic that 

caused the condition. 

•	 Intensifying the review of outstanding travel advances, which resulted in more timely settlements and collections of residual balances.

•	 Strengthening the audit trail for the payment of international personal service contractors by 

incorporating that function into the accounts payable module.

•	 Strengthening the agency’s cash management by increased monitoring of post-level cashiering 

functions. Ongoing monitoring and feedback resulted in all but three posts being certified as 

fully compliant with the agency’s reporting and reconciliation requirements for cashiers and 

their supervisors.

Equally important are efforts to provide timely, quality service to our customers—the Volunteers, budget holders, other staff members, and vendors. These efforts include searching for the optimum payment methods by category of payee, accelerating the payment of travel claims, and increasing the 

inventory of readily available data query reports. 
The Peace Corps :: performance and accountability report :: fiscal year 2006

Financial Section and Notes

40

This coming fiscal year will bring further refinements in standardizing and systematizing account reconciliations, procedures for capital assets, and internal control testing, as well as providing analysis 

to decision makers.

The FY 2004 and FY 2005 financial statement audits identified several weaknesses that are summarized 

in Appendix 2 along with the status of completion for each identified audit weakness.

The OCFO is committed to excellence in financial management. We honor that commitment by preparing annual financial statements in accordance with generally accepted accounting principles 

(GAAP) for federal government entities and by subjecting the statements to an independent audit. The 

Peace Corps’ financial statements were prepared from its financial systems and processes using the 

most reliable and complete data available. 

George A. Schutter III, CPA, CPCM

Chief Financial Officer

November 15, 2006

George Schutter, the agency’s Chief Financial Officer, addresses staff at Peace Corps headquarters.
The Peace Corps :: performance and accountability report :: fiscal year 2006

Financial Section and Notes

41

The accompanying notes are an integral part of these statements. 

Peace Corps

Balance Sheet

As of September 30, 2006 and 2005

(In Thousands)

2006 2005

Unaudited

Assets

Intragovernmental

Fund Balance with Treasury (Note 3) $ 134,516 $ 127,662

Accounts Receivable (Note 5) 980 1,712

Total Intragovernmental $ 135,496 $ 129,374

With the Public

Cash and Other Monetary Assets (Note 4) $ 65 $ 139

Accounts Receivable, Net (Note 5) 183 39

General Property, Plant and Equipment, Net (Note 6) 32,980 41,697

Prepaid Volunteer Living Allowances (Note 7) 3,813 3,668

Other Assets (Note 8) 430 660

Total Assets With the Public $ 37,471 $ 46,203

Total Assets $ 172,967 $ 175,577

Liabilities

Intragovernmental

Accounts Payable $ 442 $ 2,035

Other (Note 10) 2 1,229

Unfunded FECA Liability (Note 9 & 10) 24,157 24,606

Total Intragovernmental $ 24,601 $ 27,870

With the Public

Accounts Payable $ 9,595 $ 14,266

Federal Employee and Veteran Benefits (Note 9) 116,451 126,651

Contingent Liability (Note 10 & 12) 500 125

Non-Entity Funds 27,379 25,720

Unfunded Employment Related Liability (Note 9 & 10) 9,840 6,796

Accrued Funded Payroll and Leave (Note 10) 3,241 3,144

Unfunded Annual Leave (Note 9) 6,673 6,534

Total Liabilities With the Public $ 173,679 $ 183,236

Total Liabilities $ 198,280 $ 211,106

Net Position

Unexpended Appropriations - Earmarked Funds $ - $ -

Unexpended Appropriations - Other Funds 95,035 84,896

Cumulative Results of Operations - Earmarked Funds - -

Cumulative Results of Operations - Other Funds (120,348) (120,425)

Total Net Position $ (25,313) $ (35,529)

Total Liabilities and Net Position $ 172,967 $ 175,577
The Peace Corps :: performance and accountability report :: fiscal year 2006

Financial Section and Notes

42

The accompanying notes are an integral part of these statements. 

Peace Corps

Statement of Net Cost

For the Years Ended September 30, 2006 and 2005

(In Thousands)

-unaudited2006 2005

Program Costs:

Gross Costs $ 312,563 $ 320,727

Less: Earned Revenues 5,532 3,325

Net Program Costs $ 307,031 $ 317,402

Net Cost of Operations $ 307,031 $ 317,402
The Peace Corps :: performance and accountability report :: fiscal year 2006

Financial Section and Notes

43

The accompanying notes are an integral part of these statements. 

Peace Corps

Statement of Changes in Net Position

As of September 30, 2006 and 2005

(In Thousands)

-unaudited2005

Earmarked Funds All Other Funds Eliminations Consolidated Total Consolidated

Total

Cumulative Results of Operations

Beginning Balances $ - $ (120,425) $ - $ (120,425) $ (169,898)

Adjustments

Corrections of Errors - (6,492) - (6,492) 47,386

Beginning Balances, As Adjusted $ - $ (126,917) $ - $ (126,917) $ (122,512)

Budgetary Financing Sources:

Appropriations Used $ - $ 308,206 $ - $ 308,206 $ 316,580

Transfers-In/Out Without Reimbursement - - - - (3,593)

Other Financing Sources (Non-Exchange):

Transfers-In/Out Without Reimbursement - 702 - 702 1,805

Imputed Financing - 4,692 - 4,692 4,697

Total Financing Sources $ - $ 313,600 $ - $ 313,600 $ 319,489

Net Cost of Operations - (307,031) - (307,031) (317,402)

Net Change $ - $ 6,569 $ - $ 6,569 $ 2,087

Cumulative Results of Operations $ - $ (120,348) $ - $ (120,348) $ (120,425)

Unexpended Appropriations:

Beginning Balances $ - $ 84,896 $ - $ 84,896 $ 94,453

Adjustments

Corrections of Errors (2) (2) (2,475)

Beginning Balances, As Adjusted $ - $ 84,894 $ - $ 84,894 $ 91,978

Budgetary Financing Sources:

Appropriations Received $ - $ 322,000 $ - $ 322,000 $ 320,000

Appropriations Transferred In/Out 1,100 1,100 -

Other Adjustments (4,753) (4,753) (10,503)

Appropriations Used (308,206) (308,206) (316,580)

Total Budgetary Financing Sources $ - $ 10,141 $ - $ 10,141 $ (7,083)

Total Unexpended Appropriations $ - $ 95,035 $ - $ 95,035 $ 84,895

Net Position $ - $ (25,313) $ - $ (25,313) $ (35,530)

2006
The Peace Corps :: performance and accountability report :: fiscal year 2006

Financial Section and Notes

44

The accompanying notes are an integral part of these statements. 

Peace Corps

Statement of Budgetary Resources

For the Years Ended September 30, 2006 and 2005

(In Thousands)

-unaudited2006 2005

BUDGETARY RESOURCES

Unobligated Balance, Brought Forward, October 1: $ 20,356 $ 23,081

Budgetary Authority

Appropriation 322,000 320,000

Spending Authority From Offsetting Collections (Gross)

Earned

Collected 6,802 4,926

Change in Receivables from Federal Sources 376 (525)

Change in Unfilled Customer Orders

Advance Received - (27)

Without Advance from Federal Sources (2,064) 905

Subtotal $ 327,114 $ 325,279

Nonexpenditure Transfers, Net, Anticipated and Actual $ 1,100 $ -

Permanently Not Available

Cancellations of Expired and No-Year Accounts 1,533 7,945

Enacted Reductions 3,220 2,560

Total Budgetary Resources $ 343,817 $ 337,855

STATUS OF BUDGETARY RESOURCES

Obligations Incurred

Direct $ 319,258 $ 314,001

Reimbursable 3,522 3,498

Subtotal $ 322,780 $ 317,499

Unobligated Balance

Apportioned $ 7,716 $ 14,252

Unobligated Balance Not Available 13,321 6,104

Total Status of Budgetary Resources $ 343,817 $ 337,855

CHANGE IN OBLIGATED BALANCES

Obligated Balance, Net

Unpaid Obligations, Brought Forward, October 1 $ 82,624 $ 72,542

Less: Uncollected Customer Payments from Federal Sources, Brought Forward, October 1 2,126 1,718

Total Unpaid Obligated Balance, Net 80,498 70,824

Obligations Incurred, Net 322,780 317,499

Less: Gross Outlays 317,433 309,162

Change in Uncollected Customer Payments from Federal Sources (1,688) 380

Obligated Balance, Net, End of Period: - -

Unpaid Obligations 87,971 63,405

Less: Uncollected Customer Payments from Federal Sources 438 602

Total Unpaid Obligated Balance, Net, End of Period $ 87,533 $ 62,803

NET OUTLAYS

Net Outlays

Gross Outlays $ 317,433 $ 309,162

Less: Offsetting Collections $ 6,802 $ 4,899

Less: Distributed Offsetting Receipts $ - $ -

Net Outlays $ 310,631 $ 304,263
The Peace Corps :: performance and accountability report :: fiscal year 2006

Financial Section and Notes

45

The accompanying notes are an integral part of these statements. 

Peace Corps

Statement of Financing

For the Years Ended September 30, 2006 and 2005

(In Thousands)

-unaudited2006 2005

Resources Used to Finance Activities

Budgetary Resources Obligated:

Obligations Incurred $ 322,780 $ 317,499

Less: Spending Authority from Offsetting Collections and Recoveries 5,114 5,279

Obligations Net of Offsetting Collections and Recoveries $ 317,666 $ 312,220

Less: Offsetting Receipts - - 

Net Obligations $ 317,666 $ 312,220

Other Resources

Transfers In/Out Without Reimbursement 702 1,805

Imputed Financing from Costs Absorbed by Others 4,692 4,697

Net Other Resources Used to Finance Activities $ 5,394 $ 6,502

Total Resources Used to Finance Activities $ 323,060 $ 318,722

Resources Used to Finance Items Not Part of Cost of Operations

Change in Budgetary Resources Obligated for Goods, Services and Benefits but Not Yet Provided 11,448 1,864 

Resources that Fund Expenses Recognized in Prior Periods 10,650 7,177

Resources that Finance the Acquisition of Assets 4,801 5,017

Total Resources Used to Finance Items Not part of the Net Cost of Operations $ 26,899 $ 14,058

Total Resources Used to Finance the Net Cost of Operations $ 296,161 $ 304,664

Components of the Net Cost of Operations that Will Not Require or Generate Resources in the Current Period

Components Requiring or Generating Resources in Future Periods:

Increase in Annual Leave Liability 139 3,318

Other (+/-) 3,419 1,245 

Total Components of Net Cost of Operations That Will Require or Generate Resources in Future Periods $ 3,558 $ 4,563

Components Not Requiring or Generating Resources

Depreciation and Amortization $ 6,658 $ 8,190

Revaluation of Assets or Liabilities (+/-) 527 -

Other (+/-) 127 (15)

Total Components Not Requiring or Generating Resources $ 7,312 $ 8,175

Total Components of the Net Cost of Operations that Will Not Require or Generate Resources in the Current Period $ 10,870 $ 12,738

Net Cost of Operations $ 307,031 $ 317,402
The Peace Corps :: performance and accountability report :: fiscal year 2006

Financial Section and Notes

46

-UnauditedNote 1 Significant Accounting Policies

a) Reporting Entity 

The Peace Corps was initially established by President John F. Kennedy pursuant to Executive Order 10924 on March 

1, 1961, and was subsequently formalized by the Peace Corps Act of 1961. The Peace Corps is an independent 

agency within the executive branch of the United States government.

The core mission of the Peace Corps is to promote world peace and friendship by making available to interested, less 

developed countries men and women of the United States qualified for service abroad and willing to serve, even under conditions of hardship if necessary. The Peace Corps’ goals are to help the people of interested countries in 

meeting their need for trained men and women; to help promote a better understanding of Americans on the part of 

the peoples served; and to help promote a better understanding of other peoples on the part of Americans. 

b) Basis of Presentation 

The financial statements present the financial position, the net cost of operations, and changes in net position along 

with budgetary resources and financing activities of the agency pursuant to the requirements of 31 U.S.C. 3515 (b). 

They have been prepared using Peace Corps’ books and records in accordance with agency accounting policies, the 

most significant of which are summarized in this note. The statements are in addition to the financial reports used to 

monitor and control budgetary resources, which are prepared from the same books and records. The statements are 

presented in accordance with the applicable form and content requirements of the Office of Management and Budget 

(OMB) Circular A-136, “Financial Reporting Requirements,” issued July 2006. The statements should be read with the 

realization that they are for a component of the U.S. government, a sovereign entity. 

The Peace Corps’ accounting policies follow Federal Accounting Standards Advisory Board (FASAB) principles and 

other generally accepted accounting principles (GAAP) for the United States federal government.

The statements are subdivided in two categories: intragovernmental and public. The intragovernmental balances, 

revenues, and costs reflect financial transactions between the Peace Corps and other federal agencies. Public activities are those with nongovernmental customers, including Volunteers, contributors, employees, contractors, and vendors.

Federal Financial Statements 

Statement Federal Objective 

Balance Sheet Reflects the agency’s financial position as of the statement date. The assets are the amount of future economic 

benefits owned or managed by the agency. The liabilities are amounts owed by the agency. The net position is 

the difference between the assets and liabilities. 

Statement of 

Net Cost 

Shows separately the components of the net cost of the agency’s operations for the period. Net cost is equal to 

the gross cost incurred by the agency less any exchange revenue earned from its activities. 

Statement of 

Changes in 

Net Position 

Explains how the net cost for the agency’s operations was funded, and reports other changes in equity that are 

not included in the Statement of Net Cost. It reflects the changes in both the proprietary and the budgetary activities through the respective components: Cumulative Results of Operations and Unexpended Appropriations. 

Statement of 

Budgetary 

Resources

Provides information about how budgetary resources were made available as well as their status at the end of 

the period. It is the only financial statement exclusively derived from the agency’s budgetary general ledger in 

accordance with budgetary accounting rules. 

Statement of 

Financing

Demonstrates the relationship between budgetary amounts reported on the Statement of Budgetary Resources to 

the proprietary amounts reported on the Statement of Net Cost. The focus of this presentation is to reconcile net 

obligations to the net cost of operations. 

c) Basis of Accounting 

Accounting principles encompass both accrual and budgetary transactions. Under the accrual method, revenues are 

recognized when earned and expenses are recognized when a liability is incurred, without regard to receipt or payment of cash. Under the budgetary basis, however, fund availability is recorded based upon legal considerations and 

constraints. The agency receives financing sources through direct appropriations from the general fund of the U.S. 

Treasury to support its operations. This financing source—appropriations used—is recognized to the extent that ap-
The Peace Corps :: performance and accountability report :: fiscal year 2006

Financial Section and Notes

47

-Unauditedpropriation authority has been applied against received goods and services. 

d) Fund Accounting Structure 

The agency’s financial activities are accounted for by federal account symbol. They include accounts for appropriated 

funds and other fund groups described below for which the Peace Corps maintains financial records. 

General Funds—These funds consist of the receipts and expenditures by the government that are not earmarked by 

law for a specific purpose and used to fund agency operations and capital expenditures. 

Special or Trust Funds—These funds consist of receipts and expenditures by the government for carrying out specific 

purposes and programs in accordance with terms of the statute that designates the fund as a special fund or trust 

fund. The balances in the agency’s trust funds are non-entity assets and are included in the financial statements. 

Deposit Funds—These funds consist of monies held temporarily by the Peace Corps as an agent for others. These 

include allowance and allotment accounts for employees and Volunteers. The balances in these funds are non-entity 

assets and are included in the financial statements. 

General Fund Receipt Accounts—These funds consist of monies collected by the Peace Corps that are returned to 

the U.S. Treasury and not available for Peace Corps’ use. 

e) Budget Authority 

Congress annually passes multiyear appropriations that provide the agency with authority to obligate funds over a 

two-year period for necessary expenses to carry out operations. After expiring to create new obligations, this two-year 

budget authority is available five additional years to complete the liquidation of open obligations, advances, and receivables. After the five-year period, all open transactions for the respective fiscal year will be closed and funds returned to the U.S. Treasury. Any valid claims associated with these funds after closure must be processed against 

current year funds.

In addition, Congress enacts no year appropriations that are available until expended. All appropriations are subject 

to OMB apportionment as well as Congressional restrictions. The agency places internal restrictions to ensure the efficient and proper use of all funds. 

f) Revenues and Other Financing Sources 

Peace Corps operations are financed through appropriations, proceeds from the sale of property, and interagency 

agreements. For financial statement purposes, appropriations are recorded as a financing source and reported on 

the Statement of Changes in Net Position at the time they are recognized as expenditures. 

g) Fund Balance with the U.S. Treasury 

The fund balance with Treasury consists of appropriated funds that are available to pay current liabilities and finance 

authorized purchase commitments, and special funds that periodically are direct-financing reimbursements to the appropriated funds.

The agency does not maintain cash in commercial bank accounts for the funds reported in the balance sheet. All

cash receipts and disbursements are processed by the U.S. Treasury or the U.S. Department of State (DOS). 

The funds that make up post cashiers’ imprest funds belong to the U.S. Treasury through DOS’s accountability. 

These funds are routinely used to pay for small-value purchases of goods and services and are also used to make an 

occasional emergency payment. Per agreement with the DOS, the Peace Corps is responsible to pay for any losses 

incurred by the cashiers that would normally fall on the account holder. All international payments made by DOS on 

behalf of the Peace Corps are charged to the Peace Corps and reduce the applicable Peace Corps appropriation unexpended balance in U.S. Treasury records. As of September 30, 2006, cashier imprest funds represented by cash 

on hand, checks on hand, interim advances, and cashier checking account balances totaled approximately $3.7 million in U. S. dollar equivalents (USD). 

At any point in time, the posts have USD and local currency checks in their possession that are awaiting delivery to 
The Peace Corps :: performance and accountability report :: fiscal year 2006

Financial Section and Notes

48

-Unauditedthe payees. These checks were recorded as disbursements on Peace Corps and U.S. Treasury records in the month 

the checks were issued. As of September 30, 2006, these checks totaled approximately $2.5 million in U. S. dollar 

equivalents. 

Fund balance with Treasury is carried forward until such time as goods or services are received and payment is 

made, or until the funds are returned to the U.S. Treasury. 

h) Foreign Currency 

Accounting records for the agency are maintained in U.S. dollars, while a significant amount of the overseas expenditures are in foreign currencies. For accounting purposes, overseas obligations and disbursements are recorded in 

U.S. dollar equivalents based on the rate of exchange as of the date of the transaction. Foreign currency payments 

are made by the U.S. disbursing officers located at the U.S. Department of State Financial Service Centers in 

Charleston, South Carolina; and Bangkok, Thailand. 

Foreign currency losses and gains resulting from changes in the rate of exchange are charged (or credited) to the 

same appropriation or account that financed the basic transaction.

i) Accounts Receivable 

Accounts receivable include amounts due from other federal entities and from current and former employees and 

Volunteers. The agency recognizes an allowance for doubtful accounts consistent with the U.S. Department of 

Treasury’s requirement that agencies write-off any account that has been delinquent for more than two years. An exception to this write-off policy will be for accounts with approved payment plans in place and for which the debtor is 

meeting the terms of the plan. 

j) Advances and Prepayments 

Payments in advance of the receipt of goods and services are recorded as advances and recognized as expenses 

when the related goods and services are received. Advances are made principally to agency employees for official 

travel and prepayments to Volunteers for living allowances. 

Pursuant to Section 5(b) of the Peace Corps Act, Peace Corps Volunteers are entitled to a living allowance in order 

that they may serve effectively and safely overseas. Living allowances are paid to Volunteers to provide support while 

in their country of assignment. Allowances, which are based on local living standards and costs, include food, clothing, household items, rent, utilities, and local transportation.

k) Property, Plant, and Equipment (PP&E) 

For fiscal year 2005, the agency revised the policies and procedures for capitalized property and equipment and related depreciation to be in accordance with generally accepted accounting principles. 

A capital asset inventory of all Peace Corps PP&E assets recorded in the property management database was taken 

in fiscal year 2005. To establish existing PP&E where historical cost information necessary to comply with the recognition or measurement provisions had not been maintained, estimates were used based on either 1) cost of similar 

assets at the time of acquisition; or 2) a value based on the asset’s condition and fair market value. Additional subcategories of PP&E were identified during FY 2006 and their values were capitalized. 

The agency capitalizes all property, plant, and equipment with the exception of General property, plant, and equipment that has an acquisition cost of $10,000 or greater, a useful life of two years or more, are not intended for sale in 

the ordinary course of business, and are intended to be used or available for use by the entity. For General property, 

plant, and equipment, purchases are capitalized at $25,000 or greater for individual items and $500,000 or greater for 

bulk purchases. Acquisitions that do not meet these criteria are recorded as operating expenses. Assets are capitalized at historical cost and depreciated using the straight-line method. No salvage values were estimated in calculating 

accumulated depreciation through FY 2005 but it was determined that further analysis was required. This practice 

was reviewed at the end of FY 2006 and a policy determination was made that an estimated salvage value of 40% 

was warranted for the agency’s vehicles based on their resale value in recent years. 
The Peace Corps :: performance and accountability report :: fiscal year 2006

Financial Section and Notes

49

-UnauditedThe agency does not own any real property. Nonexpendable personal property is depreciated over 3 to 15 years. The 

agency operates land, buildings, and equipment that are provided by the General Services Administration. Rent for 

this property is expensed. Deferred maintenance amounts are immaterial with respect to the financial statements. 

Software purchased for $10,000 or developed for internal use at a cost of $25,000 or greater is capitalized and amortized over its expected life (currently 3 to 9 years). 

l) Capital Leases 

Leases are accounted for as a capital lease if they meet one of the following criteria: 1) the lease term is greater than 

75 percent of the property’s estimated economic life; 2) the lease contains an option to purchase the property for less 

than the fair market value; 3) ownership of the property is transferred to the lessee at the end of the lease term; or 4) 

the present value of the lease payments exceeds 90 percent of the fair market value of the property. 

m) Accounts Payable and Other Liabilities 

Liabilities represent the amount of monies or other resources that are likely to be paid as the result of a transaction or 

event that has already occurred. Liabilities classified as not covered by budgetary resources are liabilities for which 

appropriations have not been enacted.

n) Employee Benefits 

I. Federal Employees Compensation Act (FECA) Accrued Claims—The agency records the direct dollar costs of 

compensation and medical benefits paid on its behalf by the U.S. Department of Labor (DOL) for employees under the agency’s jurisdiction. 

II. Future Workers Compensation Benefits—FECA provides income and medical costs protection to federal employees injured on the job or who have incurred a work-related occupational disease, and to beneficiaries of employees whose death is attributable to job-related injury or occupational disease. The U.S. Department of Labor 

(DOL) administers the FECA program. DOL initially pays valid claims and bills the agency on an annual basis. 

III. Accrued Leave—A liability for annual leave is accrued as leave is earned and paid when leave is taken or employment terminates. Accrued annual leave is paid from future funding sources and is reflected as a liability not 

covered by budgetary resources. Sick and other leave is expensed as taken. 

IV. Employee Health Benefits and Life Insurance—The agency’s employees are eligible to participate in the contributory Federal Employees Health Benefit Program (FEHBP) and the Federal Employees Group Life Insurance 

Program (FEGLIP). The agency matches the employee contributions to each program to pay for current benefits. 

V. Post-Retirement Health Benefits and Life Insurance—Agency employees who may be eligible to participate in the 

FEHBP and the FEGLIP could continue to do so during retirement. The Office of Personnel Management (OPM) 

has provided the agency with cost factors that estimate the true cost of providing the post-retirement benefit to 

current employees. The agency recognizes a current cost for these and other retirement benefits (ORBs) at the 

time of employment with the agency. The ORB expense is financed by OPM and offset by the agency through 

the recognition of an imputed financing source on the Statement of Financing.

VI. Employee Retirement Benefits—Peace Corps direct hire employees participate in one of three retirement systems: Civil Service Retirement System (CSRS), Federal Employees’ Retirement System (FERS), or the Foreign 

Service Retirement and Disability System (FSRDS). The following table provides data for each of these plans: 

Employee Deductions/Agency Contributions 

Plan

% of PC 

Participants Plan TSP FICA Medicare 

CSRS 6 7% / 7% N/A N/A 1.45% / 1.45% 

FERS 92 8% / 10.7% See Note 6.2% / 6.2% 1.45% / 1.45% 

FSRDS 2 7.25% / 7.25% N/A N/A 1.45% / 1.45% 
The Peace Corps :: performance and accountability report :: fiscal year 2006

Financial Section and Notes

50

-UnauditedNote: The agency contributes 1 percent of the employee’s basic pay; it will also match an employee’s 

contributions up to 4 percent of his or her basic pay. 

Foreign service national (FSN) employees at overseas posts who were hired prior to January 1, 1984, are covered under CSRS. FSNs hired after that date are covered under a variety of local government plans in compliance with the host country’s local laws and regulations. 

The Peace Corps recognizes its share of the cost of providing future pension benefits to eligible employees 

throughout their period of employment. The pension expense not covered by budgetary resources is calculated 

using actuarial factors provided by OPM and is considered imputed cost to the agency. 

VII. Valuation of Foreign National Personal Service Contractor Severance and Retirement Liability—The Peace Corps is 

generally liable for separation or retirement payments to eligible foreign national personal service contractors (PSCs) 

in countries that require payments under local labor laws. Until systems are in place to track this liability in a timely 

manner, the estimate of the current and future costs of the severance and retirement liability is determined annually. 

o) Commitments and Contingencies 

The agency is involved in various administrative proceedings, legal actions, and claims arising in the ordinary course 

of business. Contingencies are recognized as a liability when a future outflow or other sacrifice of resources is probable and measurable. 

p) Use of Estimates 

The preparation of financial statements required management to make some estimates and assumptions that affect 

the reported amount of assets and liabilities, as well as the disclosure of contingent liabilities at the date of the financial statements and the amount of revenues and costs reported during the period. Actual results could differ from 

those estimates. 

q) Interest on Late Payments 

Occasionally, the agency incurs interest penalties on late payments. Such interest penalties are paid to the respective 

vendor in accordance with the guidelines mandated by the Prompt Payment Act, P.L. 97–177, as amended. 

r) Intragovernmental Net Costs 

The Statement of Net Costs is consolidated for the agency using a budget functional classification (BFC) code. BFC 

codes are used to classify budget resources presented in the budget of the United States government per OMB. The 

agency is categorized under BFC code number 150—International Affairs. Gross cost and earned revenues from 

other intragovernmental agencies (reimbursable agreements) fall under this code.

s) Adjustments to Maintain Inherent Account Relationship Integrity 

At the fiscal years ending 2004, 2005, and 2006, the trial balance was reviewed and it was determined that there existed out-of-balance conditions. These conditions were attributed to various factors, such as timing differences between the posting of proprietary account entries and budgetary account entries, incorrect use of transaction codes by 

users, or systemic issues that were identified but still unresolved.

In order to correct the relationships between the proprietary and budgetary accounts, a high-level analysis was performed. Cash balances on the books were aligned to agree with budgetary account balances. Additionally, cash balances were adjusted to align with the U.S. Treasury fund balance to permit the agency to pass edit checks and submit FACTS II reports to Treasury.
The Peace Corps :: performance and accountability report :: fiscal year 2006

Financial Section and Notes

51

-UnauditedNote 2 Non-Entity Assets 

Non-entity assets are composed of trust and deposit funds. These funds are not available for Peace Corps’ use and 

not part of Peace Corps resources. The Peace Corps has a fiduciary responsibility to monitor collections, status, and 

distribution. Below, as information, are the U.S. Treasury fund balances of non-entity, fiduciary assets. All the nonentity assets are non-governmental. 

Non-Entity Fund Assets 

September 30, 

2006

(in thousands)

September 30, 

2005 

(in thousands)

Trust Funds 

Gifts and Contributions (Cash) $ 603 $ 665 

Advances from Foreign Governments 3 55 

FSN Separation Liability Trust Fund 8,817 9,091 

Deposit Funds 

Volunteer Readjustment Allowance 16,849 15,933 

Volunteer Payroll Allotment Account (Payroll 

Savings Bond Account) 

(7) (24) 

Other Fund Types (Special Fund Accounts) 1,114 

Total Nonentity Assets $ 27,379 $ 25,720 

Total Entity Assets per Balance Sheet $ 145,588 $ 149,857 

Total Assets $ 172,967 $ 175,577 

Trust Fund Accounts—Consists of gifts and contributions, advances from foreign governments, and the FSN separation liability trust fund. Gifts and contributions represent funds from public, nongovernmental sources. Advances from 

foreign governments are U.S. dollar contributions supported by an agreement with the host country. The FSN separation liability trust fund represents the estimated accrued liability for separation pay (based on local labor law) of FSN 

employees. 

Deposit Fund Accounts—The Volunteer readjustment allowance is an allowance earned by Volunteers for each 

month of satisfactory service and payable upon their return to the United States. The Volunteer payroll allotment account reflects the value of held U. S. government bonds purchased by the Volunteers through allotments from the readjustment allowance. The bonds allow the Volunteers to earn interest on their earnings while in service overseas. 

Special Fund Accounts—The proceeds of sales funds represent cash received from the sale of assets, primarily vehicles, and available to be reinvested in a like-kind replacement purchase (e.g., proceeds from vehicle sales used to 

purchase replacement vehicles). 

Note 3 Fund Balance with Treasury 

Fund Balances 

September 30, 

2006 

(in thousands) 

September 30, 

2005 

(in thousands) 

Appropriated Funds $ 107,137 $ 101,942 

Total Nonentity Assets (Note 2) 27,379 25,720 

Total $ 134,516 $ 127,662 

Status of Fund Balance with Treasury 

September 30, 

2006 

(in thousands) 

September 30, 

2005 

(in thousands) 

(1) Unobligated Balance 

(a) Available $ 7,716 $ 14,252 

(b) Unavailable 13,321 6,104 

(2) Obligated Balance Not Yet Disbursed 113,479 107,306 

Fund Balance with Treasury $ 134,516 $ 127,662 

The fund balance with Treasury is equal to the unobligated balance of funds plus the obligated balance not yet dis-
The Peace Corps :: performance and accountability report :: fiscal year 2006

Financial Section and Notes

52

-Unauditedbursed. 

Available Unobligated Balance—Composed of apportionments available for allotment plus allotments available for 

obigation or commitment. 

Unavailable Unobligated Balance—Composed of unapportioned authority plus unobligated appropriation authority from 

prior years that is no longer available for new obligations. This latter authority is only available for adjustments to existing

obligations. 

Note 4 Cash and Other Monetary Assets 

September 30, 

2006

(in thousands)

September 30, 

2005 

(in thousands)

Total Cash and Other Monetary Assets $ 65 $ 139 

The cash balances represent imprest funds at headquarters and at the East Timor post, both held in U.S. currency. 

Note 5 Net Accounts Receivable 

September 30, 

2006 

(in thousands)

September 30, 

2005 

(in thousands)

Accounts Receivable—Intragovernmental $ 980 $ 1,712 

Accounts Receivable with the Public 183 39 

Total Accounts Receivable, Net $ 1,163 $ 1,751 

Intragovernmental receivables are due from other federal agencies for services provided per reimbursable agreements. Accounts receivable from the public are due from nonfederal entities, consisting primarily of receivables from 

employees. The allowance will be established in the financial records if the total amount exceeds $30,000; otherwise, the amount is considered immaterial. An allowance was not established as of September 30, 2006. 

Note 6 General Property, Plant and Equipment (PP&E) 

Components of Fixed Assets as 

of September 30, 2006:

(in thousands)

Useful Life in Years Cost Accumulated 

Depreciation 

Net Book Value 

General Property, Plant, and Equipment 5–10 $ 2,864 $ 2,103 $ 761 

Vehicles 5 15,519 5,578 9,941 

IT Hardware 3–15 8,266 4,336 3,930 

Leasehold Improvements 10 180 31 149 

Internal-Use Software 3–9 26,881 8,682 18,199 

Total $ 53,710 $ 20,730 $ 32,980 

Components of Fixed Assets as of 

September 30, 2005: (in thousands)

Useful Life in Years Cost Accumulated 

Depreciation 

Net Book Value 

General Property, Plant, and Equipment 5–10 $ 2,714 $ 1,320 $ 1,394 

Vehicles 5 17,284 9,784 7,500 

IT Hardware 3–7 4,773 1,824 2,949 

Internal-Use Software 5–9 37,464 7,610 29,854 

Total $ 62,235 $ 20,538 $ 41,697 
The Peace Corps :: performance and accountability report :: fiscal year 2006

Financial Section and Notes

53

-UnauditedFor quarter ending September 30, 2006, Peace Corps fixed assets include internally developed software and those assets 

that are reflected as active in the end of year property management databases. These assets are located at headquarters 

in Washington, D.C., the eleven regional offices, and the overseas posts. 

Values for all assets other than internally developed software were obtained from data extracted from the databases. Values for internally developed software were developed from the most reliable available data for each system. The net book 

value of internally developed software initially recorded in the September 30, 2005 financial statements was overstated by 

$9.7 million. This is the most material aspect of the corrections (a net decrease of $6.6 million) to the FY2005 values discussed above. An analysis to determine the true cost has been completed and the net book value was reduced accordingly with adjustments made to the FY2006 accounts. There are no restrictions on the use or convertibility of General 

Property, Plant and Equipment owned by Peace Corps. 

Note 7 Prepaid Volunteer Living Allowances 

September 30, 

2006

(in thousands)

September 30, 

2005 

(in thousands)

Prepaid Volunteer Living Allowances $ 3,813 $ 3,668 

Prepaid Volunteer Living Allowances—Payments of Volunteer living allowances are made prior to the entitlement month 

so the posts can ensure timely payments of the allowances. 

Note 8 Other Assets 

September 30, 

2006 

(in thousands)

September 30, 

2005 

(in thousands)

Intragovernmental

Travel Advances to Employees 43 10 

Total Intragovernmental $ 43 $ 10 

Relocation Advances to Employees 78 66 

Prepayments to Foreign National Personal Service Contractors (FNPSCs) 5 5 

Travel Advances to Employees 304 579 

Total Other Assets $ 430 $ 660 

Relocation Advances to Employees—Direct-hire employees are provided a relocation advance when appropriate. 

Prepayments to Foreign National Personal Service Contractors—Payments of the foreign national personal service contractors’ biweekly payrolls are made prior to the end of the pay period so that the direct deposits or checks are received by 

the last day of the pay period. 

Travel Advances to Employees—Travel advances are provided to employees when appropriate. Advances remain in the 

financial records until they are offset against travel entitlements or collected.
The Peace Corps :: performance and accountability report :: fiscal year 2006

Financial Section and Notes

54

-UnauditedNote 9 Liabilities Not Covered by Budgetary Resources 

September 30, 

2006

(in thousands)

September 30, 

2005 

(in thousands)

Intragovernmental Liabilities 

Unfunded FECA Liability $ 24,157 $ 24,606 

Public Liabilities 

Unfunded Annual Leave 6,673 6,534 

Other Unfunded Employment-Related Liability 9,840 6,796 

Federal Employee and Veterans Benefits 116,451 126,651 

Total Liabilities Not Covered by Budgetary Resources $ 157,121 $ 164,587 

Unfunded FECA Liability—A liability for the direct dollar costs of compensation and medical benefits paid on the 

agency’s behalf by the U.S. Department of Labor. Since the agency is dependent on annual appropriation, it will include the amount billed for the direct costs in its budget request two years later. 

Unfunded Annual Leave (U.S. Employees)—A liability for annual leave is accrued as leave is earned and paid when 

leave is taken or when the individual terminates. The balance represents the estimated value of annual leave for 

U.S.-hired employees earned but not used on September 30, 2006. Payments are charged to the appropriation current at the time of payment. 

Unfunded Annual Leave (FSNFNPSC)—The valuation of the accrued annual leave for foreign service national employees and the foreign national PSCs has been estimated for this financial statement. There are approximately 200 

foreign service nationals and a range of 1,500 to 2,000 foreign national PSCs working for the Peace Corps at fiscal 

year end. Annual leave earned is based on local labor law requirements. Annual leave is paid out of current appropriations when taken. 

Other Unfunded Employment Related Liability—A liability for the FNPSC estimated severance. Lump-sum payments 

are generally made to eligible international long-term personal service contractors based on local labor law requirements for separation. These payments are made when the individual terminates and paid for out of current appropriations.

Federal Employee and Veterans Benefits—Liability for the actuarial value of future payments for FECA as estimated 

by the U.S. Department of Labor for the agency. 
The Peace Corps :: performance and accountability report :: fiscal year 2006

Financial Section and Notes

55

-UnauditedNote 10 Other Liabilities 

September 30, 

2006

(in thousands)

September 30, 

2005 

(in thousands)

Intragovernmental Liabilities 

Advances from Others $ 2 $ 1,229 

Unfunded FECA Liability 24,157 24,606 

Total Other Intragovernmental Liabilities $ 24,159 $ 25,835 

Public Liabilities 

Accrued Funded Payroll and Leave $ 3,241 $ 3,144 

Unfunded Leave 6,673 6,534 

Other Unfunded Employment Related Liability 

(PSC Severance) 

9,840 6,796 

Contingent Liability 500 125 

Total Other Public Liabilities $ 20,254 $ 16,599 

Total Other Liabilities $ 44,413 $ 42,434 

Advances from Others—The balance of amounts advanced by other federal entities for goods and services to be furnished (e.g., money advance for small project assistance grants). 

Contingent Liability—See Note 12.

Non-current Liabilities - Unfunded FECA Liability, Unfunded Leave, Other Unfunded Employment Related Liability, 

and Contingent Liabilities are non-current liabilities. The remainder are current liabilities. 

Note 11 Leases 

The agency does not have any capital or noncancellable leases with terms longer than one year. 

Note 12 Commitments and Contingencies 

In the opinion of the management and legal counsel, the likelihood that the agency is liable for contingent liabilities related to administrative proceedings, legal actions, or claims is probable and measurable as of this statement date in 

the amount of $500,000.

Disclosure is required if there is a reasonable possibility that a loss may be incurred. The likelihood of a reasonable 

possibility of a loss related to administrative proceedings, legal actions, or claims is estimated to be $950,000 as of 

September 30, 2006. The likelihood of potential losses from overseas cashiers is estimated to be $27,000 as of September 30, 2006. 

Obligations related to canceled appropriations for which the agency has contractual commitments for pay-out are estimated to be $67,004 as of September 30, 2006.
The Peace Corps :: performance and accountability report :: fiscal year 2006

Financial Section and Notes

56

-UnauditedNote 13 Imputed Financing 

September 30, 

2006

(in thousands)

September 30, 

2005 

(in thousands)

Federal Employees Health Benefit Program (FEHBP) $ 3,645 $ 3,386 

Federal Employees Group Life Insurance Program (FEGLIP) 12 12 

Civil Service Retirement System (CSRS) 834 792 

Federal Employees Retirement System (FERS) -0- 299 

Foreign Service Retirement and Disability System (FSRDS) 201 208 

Total Imputed Costs $ 4,692 $ 4,697 

Imputed financing recognizes actual costs of future benefits which include the FEHBP, FEGLIP, and pension benefits 

that are paid by other federal entities. The agency is not required to reimburse other entities for these costs. 

Note 14 Exchange Revenues 

September 30, 

2006

(in thousands)

September 30, 

2005 

(in thousands)

Intragovernmental Earned Revenues $ 4,853 $ 3,325 

Earned Revenues from the Public 678 -0- 

Total Exchange Revenues $ 5,531 $ 3,325 

Exchange revenues represent revenue from services provided. This includes reimbursable agreements from other 

government agencies such as U.S. Agency for International Development (USAID)-sponsored HIV/AIDS education, 

prevention, and mitigation activities; and umbrella programs covering environment, health, youth, microenterprise and 

Small Project Assistance (SPA) technical assistance. 

Other Accompanying Information 

Disclosure on Contributions 

1. Media Contributions Received—The agency received $5.4 million in print, radio, and television media contributions 

through public service announcements in the first 11 months of fiscal year 2006. 

2. Host Country Contributions—The agency received cash and in-kind contributions from host 

countries.

September 30, 

2006

(in thousands)

Host Country Contributions (HCC) U. S. Treasury Foreign Currency Accounts (USD Equivalents) $840 

In-kind contributions estimated at $4.2 million in fair market value were received at posts through the fourth quarter of 

fiscal year 2006 for services, supplies, equipment, and facilities. 
The Peace Corps :: performance and accountability report :: fiscal year 2006

Financial Section and Notes

57

-UnauditedRequired Supplementary Information

Disclosure on Trading Partners 

Peace Corps 

Intragovernmental Assets by Trading Partner 

As of September 30, 2006 

(in thousands)

Trading Partner Fund Balance with Treasury Accounts Receivable 

U.S. Treasury $134,516 

U.S. Agency for International Development $ 778 

U.S. Department of State $ 81 

U.S. Department of Homeland Security $ 81 

Other $ 40 

Total $134,516 $ 980 

Peace Corps 

Intragovernmental Liabilities by Trading Partner 

As of September 30, 2006 

(in thousands)

Trading Partner Accounts Payable Other Unfunded FECA 

General Services Administration $ 163 

U.S. Department of Homeland Security $ 150 

Other $ 129 $2 $24,157

Total $ 442 $2 $24,157 

Intragovernmental Earned Revenues—The Peace Corps’ total intragovernmental earned revenues from trade transactions were less than the $500 million materiality threshold for reporting as determined by OMB. 

Intragovernmental Nonexchange Revenue—The Peace Corps did not realize intragovernmental nonexchange revenue transferred in nor incur intragovernmental nonexchange revenue transferred out. 
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The Peace Corps :: performance and accountability report :: fiscal year 2006

Financial Section and Notes

59

To: Ronald A. Tschetter, Director

From: H. David Kotz, Inspector General

Date: November 15, 2006

Subject: Audit of Peace Corps’ Fiscal Year (FY) 2006 Financial Statements

This letter transmits the three reports of Urbach Kahn and Werlin LLP (UKW) on the results of its audit 

of the FY 2006 Peace Corps’ financial statements, each titled, as follows: Independent Auditor’s Report 

on the Financial Statements; Independent Auditor’s Report on Internal Control; and Independent Auditor’s 

Report on Compliance with Laws and Regulations. 

As required by the Accountability of Tax Dollars Act of 2002, Peace Corps prepared financial statements 

in accordance with Office of Management and Budget (OMB) Circular No. A 136, Financial Reporting 

Requirements, and subjected them to audit. The Chief Financial Officers Act of 1990 requires the Inspector General, or an independent external auditor as determined by the Inspector General, to audit 

the financial statements in accordance with Government Auditing Standards issued by the Comptroller 

General of the United States. Under a contract monitored by the Office of Inspector General, UKW, an 

independent certified public accounting firm, performed the audit of Peace Corps’ FY 2006 financial 

statements in accordance with Government Auditing Standards, OMB Bulletin No. 06-03, Audit Requirements for Federal Financial Statements, and applicable sections of the U.S. Government Accounting Office 

(GAO)/President’s Council on Integrity and Efficiency (PCIE) Financial Audit Manual. 

Opinion on the Financial Statements 

In its report dated November 10, 2006, UKW issued a qualified opinion on the balance sheet as of 

September 30, 2006 and disclaimed an opinion on the balance sheet as of September 30, 2005 and for 

the related statements of net cost, changes in net position, financing, and budgetary resources for the 

years ended September 30, 2005 and 2006. 

Except for not maintaining adequate accounting records and sufficient supporting documentation for 

certain obligations recorded, the balance sheet as of September 30, 2006 presents fairly in all material 

respects the financial position of Peace Corps in conformity with accounting principles accepted in 

the United States. Peace Corps had not maintained adequate accounting records and sufficient supporting documentation for material balances presented in the balance sheet as of September 30, 2005; 

UKW was not able to sufficiently extend auditing procedures to determine the extent to which the 

statements of net cost, changes in net position, financing and budgetary resources may have been affected by this condition.

1961-2006: a legacy of service at home and abroad
The Peace Corps :: performance and accountability report :: fiscal year 2006

Financial Section and Notes

60

Matters Pertaining to the Effectiveness of Internal Control

In planning and performing its audit, UKW considered Peace Corps’ internal controls over financial 

reporting, including testing controls necessary to achieve the objectives in OMB Bulletin No. 06-03. 

UKW identified matters relating to significant deficiencies in the design or operation of Peace Corps 

internal controls that in its judgment, could adversely impact Peace Corps’ ability to record, process, 

summarize, and report financial data consistent with the assertions by management in the financial 

statements. 

Specifically, these matters were categorized as material weaknesses and reportable conditions per 

definitions of the American Institute of Certified Public Accountants. Material weaknesses are reportable conditions in which the design or operation of one or more of the internal control components 

does not reduce to a relatively low level the risk that misstatements in amounts that would be material 

in relation to the financial statements may occur and not be detected within a timely period by the 

employees in the normal course of performing their assigned functions. 

Although Peace Corps has made progress in its overall financial management during FY 2006, UKW 

reported the following four material weaknesses in its Independent Auditors Report on Internal Control:

•	 Peace Corps did not have adequate controls over its financial management structure, monitoring 

processes, and financial reporting.

•	 Peace Corps did not have adequate controls over its accounting business processes.

•	 Peace Corps was not able to substantiate material prior period account balances.

•	 Peace Corps did not have adequate controls over its information systems control environment.

Results of Tests of Compliance with Laws and Regulations

Peace Corps management is responsible for complying with laws and regulations applicable to the 

agency. To obtain reasonable assurance about whether Peace Corps’ financial statements are free of 

material misstatements, UKW performed tests of compliance with certain provisions of laws and regulations, noncompliance of which could have a direct and material effect on the determination of financial statement amounts and certain other laws and regulations specified in OMB Bulletin No. 06-03, 

including requirements of the Federal Financial Management Improvement Act (FFMIA) of 1996. 

UKW ’s test of compliance with specific laws and regulations, exclusive of FFMIA disclosed no instances of noncompliance with laws, regulations and provisions of contracts and grants that are required to 

be reported under Government Auditing Standards and OMB Bulletin No. 06-03. However, UKW ’s tests 

disclosed instances where Peace Corps financial management systems did not substantially comply 

with Federal financial management system requirements as required in FFMIA.
The Peace Corps :: performance and accountability report :: fiscal year 2006

Financial Section and Notes

61

Office of Inspector General’s Evaluation of UKW’s Audit Performance

To fulfill our responsibilities under the Chief Financial Officers Act, and related legislation for ensuring the quality of the audit work performed, we monitored UKW ’s engagement to audit Peace Corps’ 

FY 2006 financial statements by:

•	 Reviewing UKW ’s approach and planning of the engagement;

•	 Evaluating the qualifications and independence of its auditors;

•	 Monitoring the progress of the engagement throughout the audit process;

•	 Reviewing UKW ’s reports to ensure compliance with Government Auditing Standards and OMB 

Bulletin No. 06-03;

•	 Coordinating the issuance of the reports; and 

•	 Performing other procedures that we deemed necessary.

UKW is responsible for the attached auditor’s reports, dated November 10, 2006, and the opinions 

and conclusions therein. The OIG is responsible for technical and administrative oversight regarding 

UKW ’s performance under the terms of the contract.

Should you or your staff have any questions, please contact me, or Camilla Barror, Technical Audit 

Manager at 202-692-2921, or Gerald Montoya, Assistant Inspector General for Audits at 202-692-2907. 

We appreciate the courtesies and cooperation extended to UKW and to the OIG staff during the conduct of the audit and review.

Attachments

cc: Jody Olsen, Deputy Director

David Liner, Chief of Staff

George Schutter, Chief Financial Officer
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The Peace Corps :: performance and accountability report :: fiscal year 2006 63

INDEPENDENT AUDITOR’S REPORT 

ON THE FINANCIAL STATEMENTS 

Director 

Peace Corps 

Inspector General

Peace Corps 

We have audited the accompanying Balance Sheets of Peace Corps, an independent 

executive branch agency of the United States government, as of September 30, 2006 

and 2005, and the related Statements of Net Cost, Changes in Net Position, Budgetary 

Resources and Financing for the years then ended. These financial statements are the 

responsibility of the management of Peace Corps. Our responsibility is to express an 

opinion on these financial statements based on our audits. 

Except as discussed in the following paragraphs, we conducted our audits in accordance 

with auditing standards generally accepted in the United States of America; the standards 

applicable to financial audits contained in Government Auditing Standards, issued by the 

Comptroller General of the United States; and Office of Management and Budget (OMB) 

Bulletin No. 06-03, Audit Requirements for Federal Financial Statements. These 

standards and OMB Bulletin No. 06-03 require that we plan and perform the audit to obtain 

reasonable assurance about whether the financial statements are free of material 

misstatement. An audit includes examining, on a test basis, evidence supporting the 

amounts and disclosures in the financial statements. An audit also includes assessing the 

accounting principles used and significant estimates made by management, as well as 

evaluating the overall financial statement presentation. We believe that our audit provides 

a reasonable basis for our opinion. 

Peace Corps had not maintained adequate accounting records and sufficient supporting 

documentation for material balances presented in the Balance Sheet as of September 30, 

2005, and we were unable to sufficiently extend our auditing procedures to determine the 

extent to which the Statements of Net Cost, Changes in Net Position, Budgetary 

Resources and Financing for the years ended September 30, 2006 and 2005 may have 

been affected by this condition. 

Additionally, Peace Corps had not maintained adequate accounting records and sufficient 

supporting documentation to determine the proper classification of certain obligations 

recorded during the year ended September 30, 2006. We were unable to extend our 

auditing procedures to determine the extent of misclassification of the status of obligations 

on the Balance Sheet as of September 30, 2006 and the related Statements of Net Cost, 

Changes in Net Position, Budgetary Resources and Financing for the year then ended. 

Because of the matters discussed in the third paragraph, the scope of our work was not 

sufficient to enable us to express, and we do not express an opinion on the Balance Sheet 

as of September 30, 2005 and the Statements of Net Cost, Changes in Net Position, 

Budgetary Resources and Financing for the years ended September 30, 2006 and 2005. 
64 The Peace Corps :: performance and accountability report :: fiscal year 2006

INDEPENDENT AUDITOR’S REPORT 

ON THE FINANCIAL STATEMENTS, CONTINUED 

In our opinion, except for not maintaining adequate accounting records and sufficient

supporting documentation for certain obligations recorded during the year, the Balance

Sheet referred to above presents fairly, in all material respects, the financial position of

Peace Corps as of September 30, 2006 in conformity with accounting principles generally

accepted in the United States of America.

The information in the Management’s Discussion and Analysis and Required

Supplementary Information, is not a required part of the financial statements, but is

supplementary information required by the Federal Accounting Standards Advisory Board

and OMB Circular A-136, Financial Reporting Requirements. We have applied certain

limited procedures, which consisted principally of inquiries of management regarding the

methods of measurement and presentation of the supplementary information. However,

we did not audit the information and express no opinion on it.

The Other Accompanying Information is presented for purposes of additional analysis and

is not a required part of the financial statements. This information has been subjected to

the auditing procedures applied in the audit of the financial statements, and, in our opinion,

is presented fairly, in all material respects, in relation to the financial statements taken as a

whole.

In accordance with Government Auditing Standards, we have also issued reports dated

November 10, 2006 on our consideration of Peace Corps’ internal control over financial

reporting, and on our tests of its compliance with certain provisions of applicable laws,

regulations, contracts and grants. Those reports are an integral part of an audit

performed in accordance with Government Auditing Standards and, in considering the

results of the audit, those reports should be read in conjunction with this report.

Washington, DC 

November 10, 2006
The Peace Corps :: performance and accountability report :: fiscal year 2006 65

INDEPENDENT AUDITOR’S REPORT 

ON INTERNAL CONTROL 

Director 

Peace Corps 

Inspector General

Peace Corps 

We have audited the Balance Sheets of the Peace Corps, an independent executive 

branch agency of the United States government, as of September 30, 2006 and 2005 and 

the related Statements of Net Cost, Changes in Net Position, Budgetary Resources and 

Financing for the years then ended. We have issued our report thereon, dated November 

10, 2006, in which we issued a qualified opinion on the Balance Sheet as of September 

30, 2006, and disclaimed an opinion on the Balance Sheet as of September 30, 2005 and 

the related Statements of Net Cost, Changes in Net Position, Budgetary Resources and 

Financing for the years ended September 30, 2006 and 2005 for the reasons noted in that 

report. 

In planning and performing our audit, we considered Peace Corps’ internal control over 

financial reporting by obtaining an understanding of Peace Corps’ internal control, 

determined whether internal controls had been placed in operation, assessed control 

risk, and performed tests of controls in order to determine our engagement procedures. 

We limited our internal control testing to those controls necessary to achieve the 

objectives described in Office of Management and Budget (OMB) Bulletin No. 06-03, 

Audit Requirements for Federal Financial Statements, and Government Auditing 

Standards, issued by the Comptroller General of the United States. We did not test all 

internal controls relevant to operating objectives as broadly defined by the Federal 

Managers’ Financial Integrity Act of 1982, such as those controls relevant to ensuring 

efficient operations. The objective of our audit was not to provide assurance on internal 

control. Consequently, we do not provide an opinion on internal control. 

Our consideration of the internal control over financial reporting would not necessarily 

disclose all matters in the internal control over financial reporting that might be 

reportable conditions. Under standards issued by the American Institute of Certified 

Public Accountants, reportable conditions are matters coming to our attention relating to 

significant deficiencies in the design or operation of the internal control that, in our 

judgment, could adversely affect Peace Corps’ ability to record, process, summarize, 

and report financial data consistent with the assertions by management in the financial 

statements. Material weaknesses are reportable conditions in which the design or 

operation of one or more of the internal control components does not reduce to a 

relatively low level the risk that misstatements in amounts that would be material in 

relation to the financial statements being audited may occur and not be detected within a 

timely period by employees in the normal course of performing their assigned functions. 

Because of inherent limitations in internal controls, misstatements, losses, or 

noncompliance may nevertheless occur and not be detected. 
66 The Peace Corps :: performance and accountability report :: fiscal year 2006

INDEPENDENT AUDITOR’S REPORT 

ON INTERNAL CONTROL, CONTINUED

However, we noted certain matters involving the internal control and its operation that

we considered to be reportable conditions, all of which are considered material

weaknesses.

These conditions, detailed on the following pages, are summarized as follows:

1. Peace Corps did not have adequate controls over its financial management

structure, monitoring processes and financial reporting.

2. Peace Corps did not have adequate controls over its accounting business 

processes.

3. Peace Corps was not able to substantiate material prior period account

balances.

4. Peace Corps did not have adequate controls over its information systems

control environment.

In addition, with respect to internal control related to performance measures reported in

the Management’s Discussion and Analysis, we obtained an understanding of the design

of significant internal controls relating to the existence and completeness assertions, as

required by OMB Bulletin No. 06-03. Our procedures were not designed to provide

assurance on internal control over reported performance measures, and, accordingly, we

do not provide an opinion on such controls.

We also noted other less significant matters involving the internal control and its operation,

which we have reported to the management of Peace Corps in a separate letter, dated

November 10, 2006.

This report is intended solely for the information and use of the management of the Peace

Corps, the Peace Corps’ Office of Inspector General, OMB, and Congress, and is not

intended to be and should not be used by anyone other than these specified parties.

Washington, DC 

November 10, 2006 
The Peace Corps :: performance and accountability report :: fiscal year 2006 67

INDEPENDENT AUDITOR’S REPORT 

ON INTERNAL CONTROL, CONTINUED 

REPORTABLE CONDITION 1 (Material Weakness) 

PEACE CORPS DID NOT HAVE ADEQUATE CONTROLS OVER ITS FINANCIAL 

MANAGEMENT STRUCTURE, MONITORING PROCESSES, AND FINANCIAL 

REPORTING

During fiscal year (FY) 2006, Peace Corps continued to improve its financial 

management structure and monitoring processes, control environment and financial 

reporting process. The restructuring of the Office of the Chief Financial Officer was 

completed in 2006; however, additional refinements in roles and responsibilities within 

the accounting and financial reporting division are needed to ensure timely and reliable 

financial reporting. Peace Corps also still does not have a fully effective monitoring 

control over the financial reporting process. Specifically, improvements are needed in 

management review and analysis controls to ensure the propriety of the financial 

statements, related footnotes and the annual Performance and Accountability Report. 

The presentation and disclosure of Peace Corps’ financial statements were not initially in 

accordance with Office of Management and Budget (OMB) Circular A-136, Federal 

Reporting Requirements and applicable government accounting standards. Numerous 

corrections and changes were made to the draft financial statements after they were 

submitted to OMB. We also found:

x Ownership roles for specific financial statement lines, general ledger accounts and 

subsidiary ledgers need further refinement 

x Monitoring roles of the Accounting and Financial Reporting division were defined but 

the specific responsibilities and procedures need to be clarified and documented 

x Accountability for ensuring that support for account balances is available and is 

adequately reviewed for accuracy, completeness and compliance with accounting 

standards and internal policies needs enhancement. It was not always clear who 

was primarily responsible for explaining discrepancies in account reconciliations and 

amounts supporting the financial statements. Furthermore, the deficiencies in the 

account balances and in the adequacy of documentation identified in the audit were 

not always researched and resolved prior to our inquiry. 

The Government Accountability Office’s (GAO) Standards for Internal Control in the 

Federal Government, states: 

...Information should be recorded and communicated to management and 

others within the entity who need it and in a form and within a time frame 

that enables them to carry out their internal control and other 

responsibilities.
68 The Peace Corps :: performance and accountability report :: fiscal year 2006

INDEPENDENT AUDITOR’S REPORT 

ON INTERNAL CONTROL, CONTINUED 

REPORTABLE CONDITION 1 (Material Weakness), CONTINUED 

For an entity to run and control its operations, it must have relevant, 

reliable, and timely communications relating to internal as well as external 

events. Information is needed throughout the agency to achieve all of its 

objectives. 

GAO’s Standards for Internal Control in the Federal Government, also states: 

Control activities are an integral part of an entity’s planning, 

implementing, reviewing, and accountability for stewardship of 

government resources and achieving effective results.... They include a 

wide range of diverse activities such as approvals, authorizations, 

verifications, reconciliations, performance reviews, maintenance of 

security, and the creation and maintenance of related records which 

provide evidence of execution of these activities as well as appropriate 

documentation. 

OMB Circular A-123, Management’s Responsibility for Internal Control, states: 

A. Objectives of Internal Control over Financial Reporting 

Internal control over financial reporting is a process designed to provide 

reasonable assurance regarding the reliability of financial reporting. 

Reliability of financial reporting means that management can reasonably 

make the following assertions: 

x All assets, liabilities, and transactions that should be reported 

have been included and no unauthorized transactions or 

balances are included (completeness) 

Most of these issues were affected by Peace Corps’ continuing emphasis on validating 

historical data supporting key financial statement balances, rather than fully focusing on 

the effectiveness of routine financial reporting business processes. 

Recommendations

We recommend that the Chief Financial Officer of Peace Corps: 

1. Refine roles and document specific responsibilities in the Accounting and 

Financial Reporting division to ensure every financial statement line item and the 

related footnote is assigned to members of the division, with specific quality 

control procedures related to internal and external financial reporting. These 

quality control procedures include monitoring the information supporting the 

financial statements to ensure it fully matches the reported balances and is 

readily available.

2. Ensure the key responsibilities of the Accounting and Financial Reporting division 

are appropriately assigned and clearly communicated with performance goals to 

ensure all monthly and quarterly procedures necessary to produce financial 

statements in compliance with applicable accounting and reporting standards. 
The Peace Corps :: performance and accountability report :: fiscal year 2006 69

INDEPENDENT AUDITOR’S REPORT 

ON INTERNAL CONTROL, CONTINUED

REPORTABLE CONDITION 2 (Material Weakness) 

PEACE CORPS DID NOT HAVE ADEQUATE CONTROLS OVER ITS ACCOUNTING

BUSINESS PROCESSES

Business Processes Over Fund Balance with Treasury Reconciliations Were Not 

Sufficient

Peace Corps did not assign responsibility for compiling and reviewing an overall Fund

Balance with Treasury (FBWT) reconciliation. While Peace Corps made significant 

improvements in internal control over FBWT during FY 2006, we found critical portions 

of the FBWT reconciliation and reporting process were being performed by several

people in different departments, and these reconciliations were not linked, compared,

nor consolidated.

Additionally, Peace Corps was unable to completely identify and substantiate all 

unreconciled items between detailed cash activity from their general ledger and the

Governmentwide Account (GWA) Systems Report, Expenditure Activity, which is an

independent confirmation from Treasury that reflects year-to-date and current month 

cash activity in appropriation, trust, revolving, clearing and deposit fund accounts. Peace

Corps manually adjusted its general ledger balance by approximately $800,000 (net) to

agree with Treasury’s balance at September 30, 2006. This adjustment included more

than $4.1 million in debit and credit adjustments.

OMB Circular A-123, Management’s Responsibility for Internal Control,

states:

Management controls are the organization, policies, and procedures

used to reasonably ensure that (i) programs achieve their intended

results; (ii) resources are used consistent with agency mission; (iii) 

programs and resources are protected from waste, fraud, and 

mismanagement; (iv) laws and regulations are followed; and (v) reliable

and timely information is obtained, maintained, reported and used for 

decision making.

GAO’s Standards for Internal Control in the Federal Government, states: 

Control activities are an integral part of an entity’s planning,

implementing, reviewing, and accountability for stewardship of

government resources and achieving effective results.... They include a

wide range of diverse activities such as approvals, authorizations,

verifications, reconciliations, performance reviews, maintenance of

security, and the creation and maintenance of related records which

provide evidence of execution of these activities as well as appropriate

documentation.
70 The Peace Corps :: performance and accountability report :: fiscal year 2006

INDEPENDENT AUDITOR’S REPORT 

ON INTERNAL CONTROL, CONTINUED

REPORTABLE CONDITION 2 (Material Weakness), CONTINUED

Business Processes Over General Property, Plant and Equipment Were Not 

Sufficient

In FY 2005, Peace Corps could not adequately support its reported General Property,

Plant and Equipment (PP&E) financial statement balance. During FY 2006, Peace

Corps completed a full physical inventory and validation of its capitalized property

balances. However, there were not effective internal controls and processes in place for 

compiling, verifying and ensuring the completeness of their listings of capital assets.

During the FY 2006 audit, we found: 

x Some values recorded in the PP&E listing were based on budgeted cost, not

actual cost, causing inaccurate asset values and double counting of some assets 

x Some assets on the listing could not be validated by invoices or physical

verification

x Management estimates used to support cost values for assets that were not

supported by invoices were not consistently calculated and supported 

Peace Corps performed additional procedures to validate and support their property

balances and we were able to extend our procedures over the adjusted property

schedules to ensure the propriety of the PP&E balances reported in the final September 

30, 2006 Balance Sheet. We were unable to extend procedures to ensure the propriety

of the PP&E balances on the September 30, 2005 Balance Sheet.

We identified the following causes of the conditions described above: 

x Peace Corps does not yet have procedures in place to adequately record

additions and disposals for all categories of PP&E 

x Peace Corps does not have adequate policies and procedures in place relating

to retaining documentation supporting asset values

x Peace Corps did not perform sufficient existence, accuracy and completeness 

checks on its PP&E listing as part of the capital property validation, accounting

and financial reporting processes

Statement of Federal Financial Accounting Standards (SFFAS) No. 6, Accounting for 

Property, Plant and Equipment, states:

In the period of disposal, retirement from service, general PP&E 

shall be removed from the asset accounts along with associated

accumulated depreciation/amortization. Any difference between the 

book value of the PP&E and amounts realized shall be recognized

as a gain or a loss in the period that the general PP&E is disposed 

of, retired or removed from service.
The Peace Corps :: performance and accountability report :: fiscal year 2006 71

INDEPENDENT AUDITOR’S REPORT 

ON INTERNAL CONTROL, CONTINUED

REPORTABLE CONDITION 2 (Material Weakness), CONTINUED

SFFAS No. 6, Accounting for Property, Plant and Equipment also states:

Asset Recognition

All general PP&E shall be recorded at cost. Cost shall include all 

costs incurred to bring the PP&E to a form and location suitable for its 

intended use. For example, the cost of acquiring property, plant, and

equipment may include:

x Amounts paid to vendors; 

x Transportation charges to the point of initial use;

x Handling and storage costs;

x Labor and other direct or indirect production costs (for

assets produced or constructed);

Management Processes for Estimating Accrued Liabilities Needs Improvement 

In FY 2006, Peace Corps properly recorded all invoices received by the year-end as 

Accounts Payable. Additionally, they posted several manual journal entries to record

additional liabilities for goods and services received but not billed related to obligations 

over $250,000. However, our review found some errors in the amounts accrued and

inconsistent processes for documenting the amounts to be accrued.

Additionally, Peace Corps has not established an effective accrual process to identify

and record additional liabilities for goods and services that were received before

September 30, 2006, which were related to obligations under $250,000. Peace Corps 

had not performed sufficient validation of its methodology to ensure that unrecorded 

liabilities for obligations less than $250,000 would not be material to the financial 

statements. We were unable to extend our procedures to determine the adequacy of the

Accounts Payable balance as of September 30, 2005. We were able to extend our 

auditing procedures to ensure that these unrecorded liabilities as of September 30, 2006 

were not likely to be material.

OMB Circular A-136, Financial Reporting Requirements, states: 

3.4 Liabilities

General Categories. A liability is a probable future outflow or other 

sacrifice of resources as a result of past transactions or events. Financial

statements shall recognize probable and measurable future outflows or

other sacrifices of resources arising from (1) past exchange transactions,

(2) government-related events, (3) government-acknowledged events, or

(4) nonexchange transactions that, according to current law and

applicable policy, are unpaid amounts due as of the reporting date.

SFFAS No. 5 describes the general principles governing the recognition

of a liability.
72 The Peace Corps :: performance and accountability report :: fiscal year 2006

INDEPENDENT AUDITOR’S REPORT 

ON INTERNAL CONTROL, CONTINUED

REPORTABLE CONDITION 2 (Material Weakness), CONTINUED

Business Processes Over Obligations and Disbursements Were Not Sufficient

Obligations

Controls over the obligation process were not operating effectively. Policies and

procedures to ensure consistent recording of obligations and retention of adequate 

supporting documentation need to be refined and implemented. Our tests of internal

control over obligations found:

x Several obligations were recorded after the goods/services were received 

x Signed personal service contracts were not filed at headquarters (HQ) 

x Obligations related to contracts requiring additional HQ delegated authority were

recorded by the overseas Posts prior to receiving the additional delegated

authority as required. 

In connection with our testing of unliquidated obligation balances as of June 30, 2006,

we found: 

x Documentation for some obligations was incomplete, inadequate or not provided

timely

x Some obligations were posted incorrectly and corrections were not recorded

timely

x Recorded obligation amounts did not match the supporting documentation

provided

Disbursements

Controls over the disbursement process were not operating effectively. Policies and

procedures for processing disbursements and sufficient retention of supporting

documentation need to be refined. Our tests of controls found instances where

disbursements were not recorded timely. 

In connection with our testing of unliquidated obligation balances as of June 30, 2006,

we noted that documentation for some disbursements was incomplete, inadequate or 

untimely.

These issues were the result of misunderstandings by Post personnel regarding the

requirements for documenting, supporting and retaining evidence for the various types of

obligation transactions.

As a result of the errors and missing documentation found in our testing of unliquidated

obligations as of June 30, 2006, we were unable to rely on internal controls in order to 

reduce the extent of our year end procedures. Our testing also found the balance may

have been materially misstated. We were unable to extend our auditing procedures to 

determine the extent to which these matters may have had on the classification of the 

status of obligated balances on the September 30, 2006 Balance Sheet.
The Peace Corps :: performance and accountability report :: fiscal year 2006 73

INDEPENDENT AUDITOR’S REPORT 

ON INTERNAL CONTROL, CONTINUED

REPORTABLE CONDITION 2 (Material Weakness), CONTINUED

OMB Circular A-123, Management’s Responsibility for Internal Control also states:

Transactions should be promptly recorded, properly classified and

accounted for in order to prepare timely accounts and reliable financial

and other reports. The documentation for transactions, management

controls, and other significant events must be clear and readily available

for examination.

The Peace Corps Overseas Financial Management Handbook, Section 33.1.1, states:

Country Directors are delegated contracting authority for country of

assignment or other third country not to exceed fifty thousand dollars

($50,000) or local currency equivalent per procurement...Contact the

Director, Office of Contracts if additional delegation is required.

Recommendations

We recommend that the Chief Financial Officer of Peace Corps: 

Fund Balance with Treasury

3. Ensure the responsibility for monitoring and combining the different FBWT 

component reconciliations and performing an overall FBWT reconciliation is 

assigned to the Accounting and Financial Reporting division. 

4. Reconcile the complete Odyssey general ledger cash balance to Treasury’s

GWA Report monthly to validate that the Fund Balance with Treasury is properly

reported. Management should determine whether differences are Peace Corps

or Treasury errors and approves applicable corrections.

5. Perform daily reconciliations of Department of State transactions (SF 1221,

Statement of Transactions) in order to quickly identify and correct disbursement

and collections discrepancies.

General Property, Plant and Equipment

6. Establish policies and procedures for headquarters and Post property managers 

and financial reporting personnel relating to retaining documentation supporting

asset values.

7. Clarify the roles and responsibilities of the property accounting and financial 

reporting personnel for performing accuracy and completeness checks on the

capitalized property listings.
74 The Peace Corps :: performance and accountability report :: fiscal year 2006

INDEPENDENT AUDITOR’S REPORT 

ON INTERNAL CONTROL, CONTINUED

REPORTABLE CONDITION 2 (Material Weakness), CONTINUED

8. Develop and implement detailed procedures for recording capitalized property 

additions, disposals and depreciation on an on-going basis.

Accrued Liabilities

9. Develop and test a cost efficient methodology to estimate accrued liabilities for 

obligations below the management determined $250,000 threshold.

10. Develop and implement a standardized accrual calculation worksheet to ensure 

complete and consistent period-end accruals.

Obligations and Disbursements

11. Establish a policy containing documentation requirements for the various types of 

Peace Corps obligations. This guidance should include procedures for 

documenting estimates used to obligate funds, documentation retention 

timeframes and filing instructions to ensure support for transactions is readily 

available.

12. Review and refine controls over obligation entries to ensure obligations are 

entered prior to goods and services being performed, where possible, for the

correct amount, and that if they are entered incorrectly, the error will be found 

and corrected timely. 

13. Ensure signed copies of all contracts entered into by Posts are kept on file at

headquarters, in addition to the original at Post. 

14. Ensure additional delegation of authority is received by Posts, consistent with the 

Overseas Financial Management Handbook, prior to entering into applicable

contracts at Posts.

15. Evaluate the disbursement process to identify the cause(s) of disbursements not

being processed timely. Revise policy and procedures as necessary to ensure 

all disbursements are posted timely
The Peace Corps :: performance and accountability report :: fiscal year 2006 75

INDEPENDENT AUDITOR’S REPORT 

ON INTERNAL CONTROL, CONTINUED

REPORTABLE CONDITION 3 (Material Weakness) 

PEACE CORPS WAS NOT ABLE TO SUBSTANTIATE MATERIAL PRIOR PERIOD

ACCOUNT BALANCES

Our prior year engagement found that Peace Corps was unable to provide adequate 

accounting records and supporting documentation for the Accounts Payable, General

Property, Plant and Equipment and Unliquidated Obligation balances reported in the 

prior year financial statements. During FY 2006, Peace Corps undertook significant

efforts to improve the reliability of the balances reported on the Balance Sheet as of 

September 30, 2006. However, we were not able to extend our auditing procedures to 

verify the completeness or reliability of the Balance Sheet as of September 30, 2005 or 

determine the effect these matters may have had on the Statements of Net Cost, 

Changes in Net Position, Budgetary Resources and Financing for the years ended

September 30, 2006 and 2005. 

OMB Circular A-123, Management’s Responsibility for Internal Control, states: 

Transactions should be promptly recorded, properly classified and

accounted for in order to prepare timely accounts and reliable

financial and other reports. The documentation for transactions,

management controls, and other significant events must be clear and

readily available for examination.

Based on the results of our testing on the September 30, 2006 Balance Sheet, we are not

making a recommendation related to this finding.
76 The Peace Corps :: performance and accountability report :: fiscal year 2006

INDEPENDENT AUDITOR’S REPORT 

ON INTERNAL CONTROL, CONTINUED

REPORTABLE CONDITION 4 (Material Weakness) 

PEACE CORPS DID NOT HAVE ADEQUATE CONTROLS OVER ITS INFORMATION

SYSTEMS CONTROL ENVIRONMENT 

Peace Corps made improvements within its information systems control environment

during FY 2006. However, we identified the following significant internal control 

weaknesses related to the Peace Corps Financial Management System (Odyssey) and

Peace Corps’ Overseas Information Technology (IT) environment:

x The current Peace Corps Information Technology Disaster Recovery (ITDR) test 

plans had been updated to reflect the current Peace Corps environment.

However, these disaster recovery plans had not been tested during FY 2006.

Without testing the disaster recovery plan, Peace Corps cannot ensure that it will 

be able to timely recover its computer systems in the event of an emergency.

Untested plans make it difficult to confirm the accuracy of individual recovery

procedures and the overall effectiveness of the plans. 

x The Peace Corps Financial Management System (Odyssey) and the FOR 

Post/HQ applications did not have contingency plans in place. Without 

contingency planning in place, the risk of loss of financial data and operations for 

an unnecessary, extended period of time is increased.

x The Odyssey system, along with the FOR Post/HQ applications, had not been 

certified and accredited. The system is currently in production and the Odyssey

Interim Authority to Operate (IAO) has expired. Without completing the 

certification and accreditation (C&A) process, Peace Corps management cannot

ensure the security of their information systems as required by OMB. In addition, 

without a complete C&A package (i.e. security plans, risk assessments,

contingency plans), proper security may not be administered over the data within

the agency’s information systems. 

x The Peace Corps’ Africa Region Posts had insufficient resources for adequate

software and hardware support and security training for IT personnel. We noted

the following specific issues during testing conducted at overseas Posts. These 

issues are not planned to be corrected until the software refresh is completed for 

the Africa Region Posts:

o A post anti-virus server was obsolete and was no longer supported by the

vendor. However, the vendor will continue to send virus definition

updates.

o Windows NT was no longer supported as of December 31, 2005. As of

November 2006, the vendor is only supplying critical security fixes to the

platform and most third party vendors no longer support this platform for 

their products.

o The Post back-up software is no longer supported.

o The Post proxy server is no longer supported.
The Peace Corps :: performance and accountability report :: fiscal year 2006 77

INDEPENDENT AUDITOR’S REPORT 

ON INTERNAL CONTROL, CONTINUED

REPORTABLE CONDITION 4 (Material Weakness), Continued 

The delay in the deployment of the overseas software refresh to the Peace

Corps’ Africa Posts increases the risk that security vulnerabilities and flaws will 

not be addressed in a manner for minimizing and preventing security risks.

x The Overseas Post Microsoft® Small Business Server (SBS) and workstations

had vulnerabilities that are mainly due to non-current system and security 

patches. The SBS server is open to exploitable vulnerabilities that could have an

adverse affect on overseas Peace Corps data and its operations.

x Peace Corps is sharing and exchanging information maintained within Odyssey 

with external entities without a memorandum of understanding (MOU) stating the

terms and conditions as to how the data may be used by each entity.

x Peace Corps had not developed test plan standards for all levels of testing for 

proposed Odyssey system configuration changes. Test plans help to ensure all 

critical scenarios of a new implementation or change have been adequately

tested and define the responsibilities for each party, such as users, system 

analysts, programmers, and quality control. 

OMB Circular A-130, Management of Federal Information Resources, Appendix III,

requires systems and applications used by an agency to operate effectively and provide

appropriate confidentiality, integrity, and availability, through the use of cost-effective

management, personnel, operational, and technical controls. It also requires agencies to 

implement and maintain contingency planning as a requirement of a security program.

OMB requires agencies to establish and periodically test the capability to continue 

providing service within a system based upon the needs and priorities of the participants

of the system.

OMB Circular A-130, Appendix III, also states the following regarding accreditation of 

information systems:

Security accreditation provides a form of quality control and challenges 

managers and technical staffs at all levels to implement the most

effective security controls possible in an information system, give 

mission requirements, technical, operational and cost/schedule

constraints. By accreditation of an information system, an agency official

accepts responsibility for the security of the system and is fully

accountable for any adverse impacts to the agency if a breach of

security occurs. Thus, responsibility and accountability are core 

principles that characterize security accreditation.
78 The Peace Corps :: performance and accountability report :: fiscal year 2006

INDEPENDENT AUDITOR’S REPORT 

ON INTERNAL CONTROL, CONTINUED

REPORTABLE CONDITION 4 (Material Weakness), Continued 

Additionally, National Institute of Standards and Technology (NIST) Special Publication

(SP) 800-34, Contingency Planning Guide for Information Technology Systems, states:

Testing helps to evaluate the viability of plan procedures, determine the

ability of recovery staff to implement the plan, and identify deficiencies in

the plan. Testing should occur at least annually and when significant

changes are made to the IT system, supported business process(s), or

the IT contingency plan. Each element of the contingency plan should be

tested first individually and then as a whole to confirm the accuracy of

recovery procedures and the overall effectiveness.

The Peace Corps Manual Section (MS) 542, Peace Corps IT Security Policies and 

Procedures, states the following regarding the certification and accreditation of an 

information system:

An agency computer or network system that contains sensitive

information shall not be put into operation unless it has conditional or

unconditional certification and accreditation, or has been granted an 

Interim Authority to Operate (IAO) or a waiver. 

The Peace Corps MS 542, Peace Corps IT Security Policies and Procedures, states the 

following regarding MOU’s: 

No Peace Corps computer or network shall be connected to, or have the

capacity to be directly connected to, any non-Peace Corps organization,

unless the organization has the following security measures in place: a

memorandum of understanding (MOU) that sets out the terms,

configurations and dates when the connections and the security

safeguards will be in place.

The Peace Corps MS 542, Peace Corps IT Security Policies and Procedures, states the 

following regarding system developer responsibilities:

System designers/developers shall provide test procedures for the

installations of new software or configurations.

Recommendations

We recommend the Peace Corps Director ensure that: 

16. The IT Recovery Plans/Contingency Plans are tested at least annually, or as 

soon as possible, after any significant interim change is made to the Peace 

Corps’ operating environment. 
The Peace Corps :: performance and accountability report :: fiscal year 2006 79

INDEPENDENT AUDITOR’S REPORT 

ON INTERNAL CONTROL, CONTINUED

REPORTABLE CONDITION 4 (Material Weakness), Continued 

17. The Contingency Plan for the Odyssey Financial Management System, including 

the FOR Post/HQ applications, is completed and tested at least annually, or as

soon as possible after any significant interim change is made to the operating

environment.

18. Full certification and accreditation for the Odyssey Financial Management

System, including the FOR Post/HQ applications, is completed in accordance

with Peace Corps policy and OMB Circular A-130 guidance.

19. A program is developed by Peace Corps headquarters for distributing patch 

updates to the Posts in a timely manner and the deployment of the overseas

software refresh is completed for all posts.

20. A memorandum of understanding (MOU) is in place for each entity/agency

system that shares information with Odyssey. The MOU should be signed and

authorized by appropriate management officials, state the terms and conditions 

as to how the data may be used by each entity, and reviewed/updated on a 

periodic basis. 

21. Test plan standards are developed for each level of testing performed for

Odyssey system changes. 
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The Peace Corps :: performance and accountability report :: fiscal year 2006 81

INDEPENDENT AUDITOR’S REPORT ON

COMPLIANCE WITH LAWS AND REGULATIONS 

Director 

Peace Corps 

Inspector General 

Peace Corps 

We have audited the accompanying Balance Sheets of Peace Corps, an independent executive 

branch agency of the United States government, as of September 30, 2006 and 2005, and the 

related Statements of Net Cost, Changes in Net Position, Budgetary Resources and Financing 

for the years then ended. We have issued our report thereon, dated November 10, 2006, in 

which we qualified our opinion on the Balance Sheet as of September 30, 2006 and disclaimed 

an opinion on the Balance Sheet as of September 30, 2005, and the related Statements of Net 

Cost, Changes in Net Position, Budgetary Resources and Financing for the years ended 

September 30, 2006 and 2005 for the reasons noted in that report. 

The management of Peace Corps is responsible for complying with laws, regulations, and 

provisions of contracts and grants applicable to Peace Corps. As part of obtaining reasonable 

assurance about whether the Balance Sheet as of September 30, 2006 was free of material 

misstatement, we performed tests of Peace Corps’ compliance with certain provisions of laws, 

regulations, contracts and grants, noncompliance with which could have a direct and material 

effect on the determination of financial statement amounts, and certain other laws and 

regulations specified in Office of Management and Budget (OMB) Bulletin No. 06-03, Audit 

Requirements for Federal Financial Statements, including the requirements referred to in the 

Federal Financial Management Improvement Act (FFMIA) of 1996. We limited our tests of 

compliance to these provisions and we did not test compliance with all laws, regulations, and 

provisions of contracts and grants applicable to Peace Corps. 

The results of our tests of compliance with certain provisions of laws, regulations, contracts and 

grants described in the preceding paragraph exclusive of FFMIA disclosed no instances of 

noncompliance with laws, regulations, and provisions of contracts and grants that are required 

to be reported under Government Auditing Standards and OMB Bulletin No. 06-03. 

Under the Federal Financial Management Improvement Act (FFMIA), we are required to report 

whether Peace Corps financial management systems substantially comply with the Federal 

financial management system requirements, applicable Federal accounting standards, and the 

United States Government Standard General Ledger at the transaction level. To meet this 

requirement, we performed tests of compliance with FFMIA section 803(a) requirements. 

The results of our tests disclosed instances, described below where Peace Corps financial 

management systems (specifically the Odyssey system, which includes the FOR Post/HQ 

system) did not substantially comply with the first requirement discussed in the preceding 

paragraph related to Federal financial management system requirements. 
82 The Peace Corps :: performance and accountability report :: fiscal year 2006

INDEPENDENT AUDITOR’S REPORT ON

COMPLIANCE WITH LAWS AND REGULATIONS, CONTINUED

Peace Corps financial management systems did not substantially comply with

Federal financial management system requirements, including OMB Circulars A127, Financial Management Systems and A-130, Management of Federal

Information Resources, as they relate to information system security requirements.

Peace Corps did not satisfy the provisions of OMB Circular A-130, Appendix III,

Section (3), which requires agencies to implement and maintain a program to

assure that adequate security is provided for all agency information collected,

processed, transmitted, stored, or disseminated in general support systems and

major applications. Specifically,

x The Peace Corps Financial Management System, Odyssey (including the

FOR Post/HQ applications), did not have a contingency plan in place. 

Without contingency planning in place, the risk of loss of data and

operations for an unnecessary, extended period of time within Peace Corps

financial systems is increased.

x Odyssey (including the FOR Post/HQ applications) had not been certified

and accredited. The system is currently in production and the Odyssey 

Interim Authority to Operate (IAO) has expired. Without completing the 

certification and accreditation process, senior level agency officials will not

have taken the appropriate steps to ensure the security of their information 

systems as required by OMB. In addition, without a complete C&A 

package (i.e. security plans, risk assessments, contingency plans) proper 

security may not be administered over the data within the agency’s

information systems. 

The Peace Corps Chief Information Officer is responsible for the financial systems

within Peace Corps.

Specific conditions and recommended remedial actions attributable to these instances of

noncompliance are more fully described in our Independent Auditor’s Report on Internal Control, 

dated November 10, 2006. 

Providing an opinion on compliance with certain provisions of laws, regulations, contracts and

grants was not an objective of our engagement and, accordingly, we do not express such an

opinion.

This report is intended solely for the information and use of the management of Peace Corps, the

Peace Corps’ Office of Inspector General, OMB, and Congress, and is not intended to be and

should not be used by anyone other than these specified parties.

Washington, DC 

November 10, 2006
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o t h e r i n f o r m a t i o n
Other Information

The Peace Corps :: performance and accountability report :: fisc al year 2006 85

The Inspector General’s Statement on the Peace Corps’ Management Challenges 

As required by the Reports Consolidation Act of 2000 and Office of Management and Budget guidance, I am 

pleased to submit the following statement summarizing what I consider to be the most serious management 

challenges facing the Peace Corps. This statement has been compiled based on Office of Inspector General 

(OIG) audits, investigations, evaluations, and the general knowledge of the agency’s operations.

Sincerely,

H. David Kotz

Inspector General

September 29, 2006

Challenge	 The Safety and Security of Peace Corps Volunteers

Although statistics provided to us by the agency seem to demonstrate that violent crime against volunteers is down, the sheer number of violent incidents that have been reported to us over the past 

year demonstrates that the safety and security of Peace Corps volunteers remains a management challenge. We also believe that there are many instances of violent crimes not being reported. There is 

considerable evidence of the agency’s efforts to strengthen the systems supporting volunteer safety 

and security. In the coming fiscal year, we plan to undertake a comprehensive evaluation of the major 

components of Peace Corps’ safety and security strategy and the impact of the agency’s recent efforts 

in the safety and security arena.

Challenge	 Information Technology Management

The Peace Corps has been taking actions to improve and strengthen its information technology architecture and security management. However, significant issues remain outstanding, possibly exposing 

the agency to unacceptable information technology risks. The most notable are as follows:

•	 Many of the agency’s information systems have not received their final certifications and accreditations authorizing that they are acceptable for use.

•	 A systems development and life cycle process and change management practices have not yet 

been fully or consistently institutionalized.

•	 Business continuity contingency planning and testing, while ongoing, has not reached the level 

where all the agency’s critical activities could be recovered following a major disruption.

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86 The Peace Corps :: performance and accountability report :: fisc al year 2006

Challenge	 Financial Management

One of the larger challenges initially identified and continuing since fiscal year 2004 has been financial management and reporting. Much progress has been made in transitioning financial processes 

from one of a transactional, budget-based process to one with a financial management focus. Over the 

last year, much progress has been made toward this objective.

Presently, the agency continues to face challenges over its process of preparing and presenting the 

financial results of the agency on a routine basis that ensures financial reporting and information is 

consistent, reliable and repeatable over time.

Challenge	 Post Imprest Fund Management

Peace Corps is responsible for controlling and maintaining the imprest funds of approximately 70 of 

its overseas posts. Roughly $75 million flow through these imprest funds for various needs. Over the 

last few years, the OIG has repeatedly found that oversight of the imprest funds has not been consistent with agency policy and procedures, leading to shortages and overages as well as embezzlements. 

Management of the imprest funds would be enhanced by strengthening existing Peace Corps policies 

and procedures to include training the administrative staff to understand the cashier role and functions, as well as providing hands-on training of cashiers.

Challenge	 Post Management Responsibilities

In addition to imprest fund management at the overseas posts, some administrative activities have 

been identified as challenges for the agency. The most significant of these, which would benefit by developing and implementing stronger control processes, are described below:

•	 Post Property Control and Management — Posts track inventories of their equipment and furniture 

on spreadsheets, permitting anyone to easily make un-authorized changes to those records which 

potentially could lead to the removal property without detection. 

•	 Post Purchase Cards — Purchase cards are issued to each post facilitating convenient, relatively 

small purchases as needed for post operations. For example, one can easily purchase products 

available through the internet. However, internal controls over the use of post-issued purchase 

cards are weak, allowing for the possibility of unauthorized purchases to be made using Peace 

Corps funds. Without billing details, it is not possible for headquarters to know what had been 

purchased and if such purchases were in compliance with Peace Corps policy.

Challenge	 Managing Resources from Other Agencies:

The President’s Emergency Plan for AIDS Relief

Appropriately managing resources from other agencies, such as those received through the President’s 

Emergency Plan for AIDS Relief (PEPFAR) continues to be a management challenge. PEPFAR funding 
Other Information

The Peace Corps :: performance and accountability report :: fisc al year 2006 87

is provided to participating U.S. government agencies through a planning process managed by the 

ambassador in each country. These funds are legislatively limited to support AIDS-related programs.

Although there has been progress in providing appropriate guidance to County Directors on how they 

may properly use PEPFAR funds, the greater influx of PEPFAR funds planned for fiscal year 2007 presents an ongoing challenge and may need additional guidance at the post level to ensure that these 

funds are not being misused.

Challenge	 Staff Development

The level of staff development at the Peace Corps, particularly related to overseas staff is a matter the 

agency should address. Lack of adequate training for host country staff as well the lack of the necessary task analysis, training and mentoring of the program staff represent a significant challenge for 

the agency. Over the past year, in order to determine how high performing overseas posts are able to 

achieve successful results, we assessed and analyzed both the posts identified with areas of concern, 

as well as those posts identified as exemplary. We found that the quality of the staff at posts is uneven, 

and identified inconsistencies in staff management as well. Also identified were that high-performing 

posts are able to improve their programs and training events by giving meticulous attention in the 

form of time and increased training for such tasks as site selection and preparation, quality volunteer 

training, and superior volunteer support.

Challenge	 Support for Volunteers Working in Projects Dedicated

to Assisting HIV/AIDS Victims

In several posts where OIG has conducted program evaluations, we have become concerned about the 

lack of emotional and mental health support for volunteers who work with HIV/AIDS victims. Program 

and emotional support is often not adequate for those Peace Corps volunteers who, as a result of their 

work, attended funerals daily and were faced with death, many for the first time in their lives, nor 

was the support commensurate with the demands placed on these volunteers by their assignments 

and workload. Peace Corps staff are sometimes not prepared to provide this technical and emotional 

preparation and support. Host country staff bear the additional burden of social and cultural stigma 

making it difficult to even acknowledge the realities and consequences of HIV/AIDS. The agency’s exposure to the potential consequences to the volunteers requires attention.
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88 The Peace Corps :: performance and accountability report :: fisc al year 2006

Agency Response to the Inspector General’s Statement

on the Peace Corps’ Management Challenges 

To: H. David Kotz, Inspector General

From: Ronald A. Tschetter, Director

Date: November 1, 2006

Subject: Agency Response to the Inspector General’s Statement on Management Challenges

Thank you for your statement of September 29, addressing the management challenges faced by the 

Peace Corps, as required by the Reports Consolidation Act of 2000 and OMB guidance.

The Office of Inspector General (OIG) carries out its work through audits, evaluations, and investigations in order to prevent and detect fraud, waste, abuse, and mismanagement and promote economy, 

effectiveness, and efficiency in government. The agency is pleased to work alongside the OIG, and remains committed to resolving outstanding issues and addressing recommendations. 

Your statement highlights areas of challenge for the Peace Corps as the agency continues to strive for 

optimal performance while carrying out its mission in an ever-changing world. I would like to take this 

opportunity to address the issues raised as management challenges.

•	 The Safety and Security of Volunteers

The Peace Corps works in some of the least developed countries and in some of the most remote 

areas in the world. Our challenge is to operate in a way that minimizes risks and maximizes security while also providing a meaningful experience for Volunteers and their host communities. 

Safety and security issues are fully integrated into all aspects of Volunteer recruitment, training, 

and service, with emphasis on Volunteers taking personal responsibility at all times and assimilating into their communities. 

The Peace Corps has been tracking crimes against Volunteers for the last 15 years in an effort to 

identify trends and inform policies and practices to improve Volunteer safety. To simplify the reporting process and provide information immediately and confidentially to appropriate staff, the 

agency overhauled its crime reporting process. The new, upgraded system of reporting crimes via 

the Crime Incident Reporting Form (CIRF) was implemented in fiscal year (FY) 2006. During the 

first six months of the implementation of this new system, the Office of Safety and Security — in 

its quest for accurate crime statistics — noticed what appeared to be underreporting in a segment 

of the Peace Corps reporting population. Consultations with affected posts led to immediate corrective action.

The underreporting of crimes remains a challenge for law enforcement in the United States and 

throughout the world. Anecdotal information suggests that a small percentage of Volunteer victims may avoid reporting a crime if they were acting against policy at the time or if they fear the 

consequences of reporting (e.g., site changes or investigations). One of the safety and security 

competencies that trainees must learn during their pre-service training is about the importance 

of reporting crimes, regardless of the circumstances, both to help the victim and to inform how to 

best protect Volunteers in the future.

0
Other Information

The Peace Corps :: performance and accountability report :: fisc al year 2006 89

The agency is interested in any further information to assist in pinpointing the causes of underreporting to help decrease underreporting and to capture a more accurate picture of the safety 

issues Volunteers must manage in the field. The Office of Safety and Security is currently conducting an internal evaluation of the overseas safety and security program and welcomes recommendations from the OIG. 

•	 Information Technology Management

The Peace Corps has strengthened its information technology architecture and security management; however, the agency still has steps to take to address the identified challenges.

Certifications and Accreditations 

In FY 2006, the Office of the Chief Information Officer (OCIO) conducted a formal evaluation of 

the agency’s information systems to baseline an inventory of systems requiring certification and 

accreditation. This inventory was conducted in accordance with the standards of OMB, the National Institute of Standards and Technology (NIST), and the Federal Information Security Management Act (FISMA). The inspector general reviewed the up-to-date inventory and agrees with 

the methodology and outcome. 

Based on this inventory, the OCIO’s Office of Information Technology (IT) Security developed a 

plan to conduct at least three certification and accreditation efforts each year beginning in FY 

2007. To accomplish this, the OCIO acquired industry-standard software that will facilitate standardized, repeatable system certification and accreditation. Additionally, the OCIO developed 

initial system certification and accreditation scoring and acceptance criteria. The Office of IT Security also ensured all new applicable agency IT acquisitions included certification and accreditation requirements. 

Systems Development and Life Cycle Process and Change Management Practices

The OCIO is in the review stages of version 4.1 of the systems development life cycle (SDLC). The 

latest version includes updates from the Office of IT Security to ensure compliance with the latest 

FISMA and NIST guidelines. Additionally, the OCIO project management office (PMO) is in the 

final stages of establishing a project review board. This board will ensure compliance with appropriate project management principles and institutionalize adherence to SDLC.

The OCIO change management process has been refined and put into operation under the director of IT architecture, standards and practices. This standard process is now clearly documented 

and followed during weekly meetings that review all IT changes planned for the Peace Corps’ 

production environment. Agency-wide training is provided by the OCIO PMO quarterly as part 

of IT governance awareness. Additionally, OCIO account representatives provide training on an 

individual basis.
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90 The Peace Corps :: performance and accountability report :: fisc al year 2006

Business Continuity Contingency Planning and Testing

The OCIO is in the final review stages of a revised disaster/recovery plan that addresses the findings 

of a 2005 business impact analysis. This effort has included interviews with key user staff to better 

understand the requirements of the user community, to internally assess OCIO capabilities as well 

as those of our disaster/recovery contractor, and to review of industry progress in this area.

Our plan was modified to include the critical systems identified by the user community as well as 

the added capability of Peace Corps OCIO as a result of the domestic deployment of a global Active 

Directory. This added several critical systems to our infrastructure, including Active Directory, 

RSA and ISA servers, and Exchange 2003 in a clustered environment.

We have addressed these new requirements during negotiations with our disaster/recovery 

contractor and now have a substantially updated contract. This contract includes our first test 

of the new critical systems environment in December 2006. A comprehensive after-action report from this test will be a major input to our strategic decisions regarding disaster/recovery 

going forward.

•	 Financial Management

FY 2005 and FY 2006 were a period of maturation for the organization of the Office of the Chief Financial Officer (OCFO). Staff became increasingly familiar and confident with financial and other 

systems and the processes to improve the quality of input data and resulting reports. From the 

OCFO’s standpoint, the financial statements are accurate and complete in all material aspects. 

This past year, the agency made tremendous strides in its recording, reconciling, and reporting. 

Most financial statements are now produced directly from the accounting system, whereas an offline process was previously required. 

Fiscal years 2007 and 2008 will be a period of further refinement as the agency ensures that each 

key financial management process is effectively supported by compliant policies, comprehensive 

procedures, and reconciliation and analysis tools. The results of each process will be monitored 

through a combination of metric management, peer group presentations, internal assessments, 

and independent testing.

•	 Post Imprest Fund Management

Oversight of posts’ imprest funds was extremely active during FY 2006, and careful oversight will 

continue in future years. All cashiering support functions and cash management are now under 

the director of accounts receivable and cash management within the OCFO. Cash management 

internal controls, reporting, and monitoring have all been reviewed and improved. One specific 

initiative, the Post imprest fund certification program, automated the cash management reconciliation and reporting process. This program certifies posts as fully compliant with the agency’s 

reporting and reconciliation requirements for cashiers and their supervisors, and includes periodic surprise cash counts. Through this initiative, the OCFO, in collaboration with the three 

regions and posts, validated all of the transaction data an overseas post uses to record cashiering 

activity. All but three posts’ imprest funds—Mauritania, Uganda, and Zambia—have now been 

certified under this initiative.
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The Peace Corps :: performance and accountability report :: fisc al year 2006 91

•	 Post Management Responsibilities

Post Property Control and Management

The Office of Management is in the process of revising the Peace Corps Manual, Section 511, which 

governs property management, to include access control requirements. This revision assigns responsibilities and mandates periodic process reviews to ensure adherence and effectiveness. The 

Peace Corps is currently identifying business requirements that would enable the agency to procure an automated worldwide inventory management system. Access control capability is identified as a mandatory design feature requirement.

Post Purchase Cards

The primary objective of the purchase card program is to reduce the procurement process/administrative cost for small dollar purchases. To that end, the agency identified a documentation 

and transaction review approach that provides oversight, which is practical, cost effective, and 

in line with the intent of the government-wide program. To mitigate risk to the Peace Corps, each 

purchase cardholder reports to an approving official. The approving official is responsible for reviewing and certifying monthly each of the cardholder’s purchase card transactions.

At the agency level, the Office of Acquisitions and Contract Management (OACM) has implemented monthly transactional reviews, which targets (1) purchases exceeding the micro-purchase 

limit, (2) split purchases, (3) suspected improper or fraudulent transactions, (4) unauthorized 

purchases, and (5) domestic purchases that were charged sales tax. While these reviews provide 

an opportunity for training, serious violations or card misuse will be tracked and reported as appropriate.

A new manual section codifying the purchase card program, including updated internal controls 

and a “don’t buy list,” is expected to be published during the first quarter of FY 2007. Upon publication of the new policy, OACM will develop computer-based training for the new processes and 

procedures. This training should be extremely beneficial for cardholders and approving officials 

serving at our overseas posts. 

 • Managing Resources from Other Agencies: The President’s Emergency Plan for AIDS Relief

Effective control and management of funds from outside sources is important to the Peace Corps, 

and will remain a focus of the agency when working with funding through the President’s Emergency Plan for AIDS Relief (PEPFAR). In an effort to provide clear expectations and guidance to 

the field, the Office of AIDS Relief worked with the OCFO and the regions to update and reissue 

Peace Corps guidance for PEPFAR proposals (June 2006). As part of this process, the OCFO devised a budget template for PEPFAR planning purposes, which is also used for allotment requests 

after funding is approved. The guidance and the template not only enable the agency to isolate 

PEPFAR funds from its own appropriated funds, but they allow each post to track PEPFAR funding 

according to program service (e.g., prevention, orphans and vulnerable children, etc.), which is 

an important step in establishing accountability. This document included guidelines for programming as well as for budget and acquisition, which the AIDS Relief Coordinator discussed directly 
Other Information

92 The Peace Corps :: performance and accountability report :: fisc al year 2006

with 12 posts during a four-day PEPFAR conference in South Africa. Additionally, in FY 2006, the 

Office of AIDS Relief conducted a three-day training workshop for key staff on PEPFAR program 

and budget guidance.

The agency anticipates increased funding in FY 2007 and will work to ensure that staff has the 

training and guidance they need to effectively work with PEPFAR funds. To provide greater support to the posts receiving PEPFAR funds, the Office of AIDS Relief has begun the process to recruit and hire a staff member who will focus on administrative and budget issues.

•	 Staff Development

The agency recognizes staff development as both an opportunity and a challenge. This is especially true for overseas staff. Presently, the Peace Corps provides in-depth training to select overseas staff through its overseas staff training (OST). OST participants include country directors, 

administrative officers, and programming and training staff. The agency also conducts numerous 

continuing education workshops for various staff on a regional and sub-regional basis. Our committed staff overseas includes many who are new to the agency and others who have served the 

agency for long periods of time but may need increased training to navigate the ever-changing 

operating environment. 

While the unevenness of staff abilities is a challenge, the agency aims to develop a continuum 

of training that is based on core and functional competencies that is delivered with appropriate learning and testing methods. The agency also looks to utilize technology to enhance online 

learning and collaboration. Timely and focused training can help the agency build the capabilities 

of its overseas staff and retain high-quality staff.

• Support for Volunteers Working in Projects Dedicated to Assisting HIV/AIDS Victims

The Peace Corps is aware of the challenges facing Volunteers when they take up an assignment 

in a country with a high HIV prevalence rate. This awareness was developed through direct communication from and interviews with Volunteers, country directors, Peace Corps medical officers, 

the Office of Special Services, and from OIG country reports. Effectively supporting Volunteers requires the work of offices across the agency to ensure that the ramifications of living and working 

in high HIV-prevalence areas are addressed in all aspects of recruitment, training, and support. In 

collaboration with other offices within the agency, the Office of AIDS Relief has been involved in the 

following efforts to address ways in which the Peace Corps can better support these Volunteers:

•	 Revising and publishing the HIV/AIDS brochure for recruitment purposes to include a new 

message on how “the road will not be easy”; 

•	 Producing an HIV/AIDS video that includes content about the challenges (from the Peace Corps 

Director and from the Volunteers) of living in a high-prevalence country; 

•	 Establishing a pilot program for certain applicants to receive HIV/AIDS technical training and 

hospice training;
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The Peace Corps :: performance and accountability report :: fisc al year 2006 93

•	 Conducting a review of the HIV/AIDS program in Tanzania, which offers a model of integrated 

support;

•	 Initiating development of a “resiliency skills” training module for Volunteers, which was tested 

in Ukraine. 

Peace Corps/Tanzania’s model of supporting Volunteers is a promising one as the agency looks 

at best practices in this area. The post’s program includes training on coping skills, a peer support network, a proactive medical officer with counselors on hand for referrals, and sub-regional 

technical workshops. Additionally, an HIV/AIDS training toolkit has been in production over the 

past year (including a module on Volunteer support) and is expected to be ready for distribution 

in 2007. The agency will continue to carry out these and other efforts to ensure that Volunteers 

working with HIV/AIDS issues get the support that they need. 
The Peace Corps :: performance and accountability report :: fisc al year 2006

Financial Section and Notes

94

a p p e n d i c e s
The Peace Corps :: performance and accountability report :: fisc al year 2006 95

Appendices

Appendix 1: Material Weaknesses and Non-Conformances

0

The one material weakness relates to internal 

control and financial reporting for the business 

process Property, Plant & Equipment (PP&E), 

adequate controls over capital assets. Progress 

toward resolution of this weakness over the last 

fiscal year includes: 

• Issuing CFO Bulletin 06-09 in March 2006 

requiring supporting documentation and 

certification of FY 2005 overseas property. 

• Issuing two CFO Policy Statements, 06-04 

and 06-05, in August 2006 on accounting 

for PP&E and accounting for software.

• Reviewing and comparing payments and 

collections potentially involving capital assets to the corresponding property records 

to ensure compatibility.

• Assembling all existing documentation on 

the vehicle fleet at the headquarters and 

preparing a 2006 vehicle fleet management 

guide.

• Refining recorded capitalized estimates for 

Odyssey/FOR Post and adjusting the net 

book value downward by $9.7 million.

• Determining that an estimated 40 percent 

vehicle salvage value was warranted and 

adjusting depreciation by $3.8 million.

• Identifying and capitalizing an additional 

$8.4 million of assets acquired in previous 

years involving information technology 

(IT) hardware and software, telecommunications equipment, aggregate purchases of 

furniture, and leasehold improvements.

The remaining efforts on the corrective action 

plan to mitigate this weakness should be completed by March 2007 and consist of the following:

• Refining and implementing a policy that 

correctly capitalizes and depreciates IT 

hardware and software and general PP&E.

• Improving and documenting completeness 

tests in all areas of PP&E.

• Ensuring that book values for PP&E are accurate and periodically reviewed and that 

the subsidiary ledgers are being updated 

regularly.

• Documenting methodology for capitalizing 

leases at post and headquarters.

The two non-conformances—completeness of 

a disaster recovery strategy and enterprisewide financial system accreditation and certification—did not conform to the objectives of 

FMFIA that address government-wide financial 

management systems requirements. Achieving 

complete financial system certification and accreditation and implementation of the contingency plan are not anticipated until March 2007. 

Progress toward achieving conformance within 

these two areas over this last fiscal year includes 

drafting and reviewing the Peace Corps IT security documentation standards. The remaining 

efforts on the corrective action plan to eliminate 

these non-conformances include:

• Finalizing Peace Corps IT security documentation standards.

• Testing the disaster recovery plan.

• Finalizing the financial system certification 

documentation, including the system security plan, the disaster recovery plan, and 

the business continuity plan.

• Completing financial system certification 

and accreditation. 
The Peace Corps :: performance and accountability report :: fisc al year 2006

Appendices

96

Appendix 2: Current Status of Prior Audit Recommendations

Current Status of Prior Audit Recommendations Directly Involving Financial Processes

Summary :: Financial Notice of Findings—Fiscal Year (FY) 2006

Financial Management and Reporting

Description Number Severity Status

Financial Management Control Structure NoF-01-FIN-2004 High Near Completion

Undelivered Orders NoF-01-FIN-2005 High Near Completion

Subsidiary Ledgers NoF-03-FIN-2004 High Near Completion

Financial Statements NoF-03-FIN-2005 Medium Completed

Check Donations NoF-05-FIN-2005 Low Completed

Advances/Receivables NoF-07-FIN-2004 Medium In Progress

FMFIA Compliance NoF-07-FIN-2005 Medium In Progress

Financial Management Structure and Monitoring Processes NoF-10-FIN-2004 High Near Completion

Host Country Contributions NoF-14-FIN-2004 Medium Completed

Property, Plant and Equipment (PP&E)

Description Number Severity Status

Property, Plant, and Equipment NoF-04-FIN-2004 High Near Completion

Intra-governmental Reconciliation

Description Number Severity Status

Distinction Between Federal and Non-Federal Transactions NoF-02-FIN-2004 High Completed

Accounts Payable and Other Liabilities

Description Number Severity Status

Accounts Payable Manual Journal Entries NoF-02-FIN-2005 High Near Completion

Fund Balance with Treasury (FBWT)

Description Number Severity Status

Fund Balance with Treasury NoF-05-FIN-2004 High Near Completion

0
The Peace Corps :: performance and accountability report :: fisc al year 2006 97

Appendices

Personnel Actions

Description Number Severity Status

Failure to Monitor Personnel and Payroll NoF-04-FIN-2005 Low In Progress

Post Operations

Description Number Severity Status

Overseas Post Accounting and Reporting Functions NoF-08-FIN-2004 High Near Completion

Purchase Cards NoF-15-FIN-2004 Medium In Progress

Reconciliation of Foreign Service National (FSN) Pay NoF-16-FIN-2004 Medium In Progress

Post Budgets NoF-18-FIN-2004 Low Completed

Prompt Payment Procedures NoF-19-FIN-2004 Low Completed

Status Key

Completed: Completed during FY 2006

Near Completion: Substantial progress on corrective action plan with completion by second quarter of FY 2007

In Progress: Portions of the corrective action plan have been completed while other portions remain to be completed

Current Status of Prior Audit Recommendations Not Directly Involving Financial Processes

Summary :: Non-Financial Notice of Findings—Fiscal Year (FY) 2006

Operational

Description Number Severity Status

Professional Development Training NoF-03-IT-LOW-2005 Low In Progress

Performance Measures NoF-06-FIN-2005 Medium Completed

Medical Services NoF-11-FIN-2004 Medium In Progress

Information Technology

Description Number Severity Status

Odyssey Security Plan System Owner NoF-01-IT-LOW-2005 Low Near Completion

Information Technology (IT) Recovery Plan NoF-02-IT-HIGH-2003 High Near Completion

Security Awareness Training NoF-02-IT-LOW-2005 Low Completed

Data and Resource Classification Rankings NoF-04-IT-LOW-2005 Low Near Completion

Lack of Formal Policies and Procedures for Odyssey Access NoF-05-IT-LOW-2005 Low Near Completion

Lack of Formal Policies and Procedures for Odyssey

and Local Area Network Access

NoF-05-IT-MED-2005 Medium Near Completion

Archiving, Deleting, and Sharing Odyssey Data Files NoF-06-IT-LOW-2005 Low Near Completion

FOR Post/FOR Headquarters Access NoF-07-IT-LOW-2003 Low In Progress

Memorandum of Understanding NoF-07-IT-MED-2005 Medium Near Completion
The Peace Corps :: performance and accountability report :: fisc al year 2006

Appendices

98

Description Number Severity Status

FOR Post/FOR Headquarters Audit Logs NoF-08-IT-MED-2003 Medium Near Completion

Computer Room Diagram NoF-08-IT-LOW-2005 Low Completed

Network Diagram NoF-09-IT-LOW-2005 Low Near Completion

Inventory of System/Application Documentation NoF-10-IT-LOW-2005 Low Near Completion

FOR Post/FOR Headquarters No Contingency Plan NoF-11-IT-HIGH-2003 High Near Completion

Testing of Environmental Controls NoF-11-IT-LOW-2005 Low Near Completion

FOR Post/FOR Headquarters Segregation of Duties NoF-12-IT-MED-2003 Medium Near Completion

Data Center Emergency Procedures NoF-12-IT-LOW-2005 Low Near Completion

Continuity of Operations (COOP) Plan NoF-13-IT-MED-2005 Medium Completed

Testing of Odyssey Contingency Plans NoF-14-IT-LOW-2005 Low Near Completion

System Programmers NoF-15-IT-MED-2005 Medium Near Completion

Odyssey Audit Logs NoF-16-IT-MED-2003 Medium Near Completion

Test Plans NoF-16-IT-MED-2005 Medium Near Completion

Odyssey No Contingency Plan NoF-17-IT-HIGH-2003 High Near Completion

Odyssey System Change Test Results NoF-17-IT-LOW-2005 Low In Progress

FOR Post/FOR Headquarters Certification & Accreditation NoF-20-IT-HIGH-2004 High Near Completion

Overseas Small Business Server (SBS) Vulnerabilities NoF-20/22-IT-HIGH-2003 High In Progress

Overseas Post IT Budget NoF-22-IT-HIGH-2004 High In Progress

Odyssey Certification & Accreditation NoF-23-IT-HIGH-2004 High Near Completion

Odyssey Account Review NoF-24-IT-MED-2004 Medium Near Completion

Odyssey Segregation of Duties NoF-26-IT-MED-2004 Medium Near Completion

Overseas Posts: Disaster Recovery, Security, System

and Physical Access and Backup Procedures

NoF-29-IT-MED-2004 Medium In Progress

Overseas Posts: Overseas Architecture Changes NoF-30-IT-MED-2004 Medium In Progress

Status Key

Completed: Completed during FY 2006

Near Completion: Substantial progress on corrective action plan with completion by second quarter of FY 2007

In Progress: Portions of the corrective action plan have been completed while other portions remain to be completed

Information Technology (cont’d)
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